Fake GST refund claims: Tax officials probe bank details of 28 bogus firms - Hindustan Times

Fake GST refund claims: Tax officials probe bank details of 28 bogus firms

BySanjeev K Jha, Noida
Mar 18, 2020 11:57 PM IST

The economic offence wing (EOW) court in Meerut on Wednesday sent two alleged suspects on 14 days’ judicial custody for their alleged involvement in claiming huge amounts as refunds against the accumulated input tax credit (ITC) on the inverted tax structure in the name of 28 bogus firms. The two men, who are also believed to be the masterminds of the fraud, were arrested by EOW of Uttar Pradesh police on Tuesday.

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Officials of the central goods service tax department(CGST) said that at least 28 bogus firms had generated invoices for 1,892 crore that could be claimed as refund. The department had already ordered to make payments worth 264 crore against the refund claims.

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Based on the information gathered during the questioning of the two arrested suspects, the CGST officials have started looking into the bank details of the 28 firms, registered in Gautam Budh Nagar district and other central tax commissionerates such as Greater Noida, Faridabad, Gurugram and Delhi, to ensure safe recovery of the claims disbursed.

Manoj Sinha, spokesperson, Gautam Budh Nagar CGST commissionerate, said after finding that 28 proprietorship and partnership firms had claimed huge amounts as refunds against the accumulated input tax credit (ITC) on the inverted tax structure, two persons were arrested from Meerut during a massive hunt conducted by the department Tuesday. “Both of them have been sent on 14 days’ judicial custody by the state EOW. During questioning, the duo has confessed that they had been assigned by the firms to swindle away the tax returns, showing zero-rated supply of goods in their balance sheets,” he said.

Sinha further said the duo had obtained KYC documents from proprietors and partners of all the 28 firms. “Surprisingly, the account details of all these bogus firms said to be run from 18 different places, were linked to the personal bank accounts of both the arrested persons. We have started checking the bank details of everyone associated with their accounts. I hope we will be able to nab the other players involved in the scam very soon. According to tour finding so far, these bogus firms had generated invoices for passing on the ITC, which is around 1,892 crore. Due to this fraud, the CGST department has even ordered to make the payments of 264 crore against their claims. As soon as we smelled the rat, we recovered 60 crore and withheld the pending claims of 131 crore,” he said.

Meanwhile, an officer of the EOW team that produced the duo before the court, said that the names of the arrested persons have been kept confidential as their confessional statements indicate that a powerful business syndicate was involved in the alleged fraud. “To us, the arrested duo appears mere pawns as the rackets behind claiming huge CGST refunds in the name of bogus firms have been active in almost every part of the country after the introduction of GST. The amount involved in the fraud can rise multiple time,” the officer, who requested anonymity, said.

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