CGST Commissionerate busts syndicate involved in Rs 1,000 cr ITC fraud

Five bank accounts that were used to park the proceeds by the syndicate have been provisionally attached, it said

Meerut CGST Commissionerate on Thursday busted a syndicate that fraudulently claimed Input Tax Credit of over Rs 1,000 crore through a network of 232 fake firms and arrested three persons.

The Anti-Evasion branch of Central Goods and Services Tax (CGST) of Meerut Commissionerate started an investigation in October 2023 into a large syndicate that fraudulently claimed ITC by way of fake billing, an official statement said.

The investigation conducted so far has revealed that a total number of 232 fake firms, with 91 firms registered on a single mobile number, are registered at various places across the country and have passed inadmissible ITC of around Rs 1,048 crore, it said.

The total value of goods shown to be supplied through these firms is around Rs 5,842 crore, it said.

Through the use of various analytical tools such as E-way Comprehensive Portal, Advait and Business Intelligence and Fraud Analytics (BIFA), the CGST Commissionerate carried out a deeper investigation, it said.

During the course of the investigation, it came to light that Full Fledged Money Changer Companies’ (FFMCs) were used for parking/routing of funds generated through fraudulently passed on ITC, it said.

Further investigation revealed bulk purchases of around Rs 1,120 crore from two of such FFMCs from other FFMCs, it said.

However, it said, no record of further disposal/receipt of said foreign currency has been recovered during searches.

Owners/ Directors of these two FFMCs, too could not produce any record or details of the ultimate recipient of the foreign currency, it added.

Five bank accounts that were used to park the proceeds by the syndicate have been provisionally attached, it said.

Three persons have been arrested so far for being perpetrators and conspirators in the creation of fake firms/ preparation of fake invoices without the supply of any underlying goods/services/ passing on of fraudulent ITC to various beneficiaries/ retaining of benefits arising out of the proceeds of GST evasion, it said.

Further investigation is underway, it added.