In a nationwide campaign against fake invoices, non-existent or fly-by-night companies, and circular trading, 25 people were arrested in just four days, said the Directorate General of GST Intelligence (DGGI) sources.
The 25 arrested included the son of the sugar baron MLA and two chartered accountants. Approximately 350 cases were booked for the issuance of counterfeit invoices against 1180 organizations. The exact amount of false input tax credit (ITC) involved is being calculated, according to the sources listed above.
The search and investigation were intended to locate and arrest the other persons involved in the racketeering, as well as the recipients who used false invoices to escape GST, income tax, and money laundering, they added.
Significant commodities included in these cases are MS/SS scrap, articles of iron & steel, copper rod/wire, waste & scrap of non-ferrous metals, plastic granules, PVC resin, ready-made clothes, gold & silver, construction services, contract services, agro-products, milk products, telephone, manpower supply services, advertising and animation services, etc.
DGCI sources said that the campaign against the GST and ITC fraudsters is likely to escalate further in the coming days and several more arrests will be made. The top source also reported that the cases will also be prosecuted by the Compliance Directorate for Money Laundering against the beneficiaries.
The drive was stepped up following a high-level video-conferencing meeting at the Department of Revenue on 7 November, attended by all senior officials of DGGI, GST, GSTN, Enforcement Directorate, CBIC, and CBDT.
To intensify the drive further, a plan has already been chalked out.
Following the crackdown on GST fake invoice frauds, DGGI and CGST formations have so far acted in Delhi, Bengaluru, Mumbai, Ludhiana, Chennai, Nagpur, Kolkata, Gurugram, Ahmedabad, Surat, Vadodara, Bhilai, Jodhpur, Hyderabad, Visakhapatnam, etc.
Considering the menace of the fake invoices and hawala racket and their damaging impact on the stability of the economy, it is also being examined whether, apart from taking action against the beneficiaries under GST laws, Income Tax Act, and Prevention of Money Laundering Act, issuers of fake invoices as well as beneficiaries of such invoices can be detained under COFEPOSA," said the sources, adding further that the procedure for new GST registration is also being tightened.
"Companies whose owners or promoters do not have an appropriate record of income tax payment will need physical and financial verification before their companies can apply for the GST."