GST racket worth Rs 220 cr busted in Chennai, two held

The Directorate General of GST Intelligence busted a racket involving the issuance of fake invoices for goods worth over Rs 220 crore without the goods being actually supplied, during recent raids on firms in Chennai and Madurai.

By creating fake invoices for Rs 220 crore through shell firms without supplying goods, the companies claimed Rs 40 crore input tax credit (ITC) since June this year. The ITC was taken, without actually having supplied the goods or paid tax on them.

Two persons based in Chennai, who are believed to have orchestrated the entire scheme, were arrested and 27 bank accounts were provisionally attached. Cheque books, with pre-signed leaves, linked to 45 bank accounts, rubber stamps in the names of 30 companies, computer hard disks, mobile phones with incriminating message exchange trails have been seized, a communication from K Balaji Majumdar, additional director general, DGGI said.

The modus operandi included creation of several bogus companies and bank accounts using PANs and Aadhaar numbers of family members, friends and employees. It then went on to create a complex maze of transactions without supplying goods, duly making payments in respect of bills so traded and then sharing the money through hawala. The two arrested men also provided fake invoice challans.

A senior GST intelligence official noted that they are widening the probe and would soon nail down other beneficiaries. They would have to return the money with interest, the officer added. The masterminds of this big network of frauds were ready with their plans two months before GST was implemented, sources added.