Quick Summary
Expanding investigation into allegedly wrongful claims of input tax credit by insurance companies, the tax authorities are probing a section of auto-mobile dealers who have supposedly generated fake invoices without providing any service, which is a punishable offence under goods and services tax (GST) law. The authorities are learnt to have questioned the car dealers to explain the services they provided general insurance companies. The investigators suspect car dealers pitched for insura
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FAQ :
GST authorities are questioning auto dealers as part of an investigation into alleged fake invoicing. Dealers are suspected of issuing invoices for services not provided to insurance companies, which then claimed input tax credit based on these fake bills.
The auto dealers are suspected of raising fake invoices without providing any actual services to general insurance companies. This was allegedly done to allow insurance firms to claim input tax credit.
Issuing an invoice without a genuine supply of services can lead to a jail term of up to five years if the amount involved is ₹5 crore or above. There is also a 100% penalty, and the registration of the issuer can be cancelled. The offence is not bailable.
The suspected tax evasion in this case is around ₹2,500 crore, which is higher than the initial estimate of ₹1,000 crore.
Motor insurance service providers are automobile dealers who sell insurance on behalf of an insurance company or intermediary. They are appointed to distribute or service motor insurance policies for vehicles sold through them.
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