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DGGI Arrests Man for Rs 37.2 Crore Fake ITC Fraud

Last updated: 10 June 2024

In a significant crackdown on tax evasion, officials from the Directorate General of GST Intelligence (DGGI), Coimbatore, have arrested an individual for availing of fake input tax credit amounting to ₹37.2 crore and passing on fake input tax credit worth ₹65.42 crore.

Details of the Operation

According to a press release from the DGGI, the arrest followed an extensive search operation conducted on Wednesday at the residence and business premises of the accused. Acting on specific intelligence, the officials uncovered a complex network of fraudulent activities involving multiple fake identities and businesses.

DGGI Arrests Man for Rs 37.2 Crore Fake ITC Fraud

The officials seized

  • PAN cards of 17 individuals
  • Aadhaar cards of 20 individuals
  • A weigh bridge printer
  • Bank passbooks for 21 accounts
  • Cheque books for 41 accounts
  • Seals of 16 firms
  • Multiple mobile phones, SIM cards, and debit cards

These items indicate a well-organized effort to exploit the GST system by creating and operating fictitious entities to generate and distribute fake input tax credit.

Modus Operandi

The investigation revealed that the accused had issued fake invoices through four companies he owned and operated. These companies ostensibly supplied bazar scrap to TMT bar manufacturers. By doing so, they availed of and utilized fake input tax credit worth ₹32.6 crore. The fraudulent credits were then used to reduce tax liabilities illegally, causing significant revenue loss to the government.

Continuing Investigations

The press release noted that investigations are ongoing. The DGGI is working to trace the entire network of individuals and entities involved in this fraud. Further arrests and recoveries are anticipated as the investigation progresses.

Impact and Implications

This case highlights the stringent measures being adopted by GST authorities to combat tax fraud and protect the integrity of the tax system. By identifying and prosecuting such offenders, the DGGI aims to deter similar fraudulent activities in the future.

Tax experts commend the DGGI's proactive approach, emphasizing that such actions are crucial for maintaining a fair and transparent tax environment. Businesses are urged to comply with GST regulations and avoid engaging in or facilitating fraudulent practices.

The DGGI has requested the public to report any suspicious activities related to GST fraud to help in their efforts to curb tax evasion.

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