DGGI Nagpur Zone busts pan-India fake invoice racket
   Date :20-Aug-2020

DGGI _1  H x W:
 
 
 
Staff Reporter :
 
The matter involves fraudulent transactions of Rs 434 cr by 23 entities
 
 
Directorate General of GST Intelligence (DGGI) Nagpur Zonal Unit conducted simultaneous searches at a number of places at Nagpur, on the basis of specific information regarding the operation of a massive fake invoice racket. Based on the documents unearthed during these searches, subsequent searches were conducted at Jalandhar, Sonepat, and New Delhi.
 
The entire matter involves fraudulent transactions of Rs 434 crore by 23 entities. According to DGGI Nagpur Zonal Unit, during the investigations and on interrogation of the authorised persons, it was revealed that a number of entities across India, from Tamil Nadu to New Delhi, were involved in ‘issuance of fake invoices and availment of fraudulent Input Tax Credit, without supply of any goods’. They were engaged ‘only in paper transactions’ of goods ranging from iron and steel products, insulated wires, plastic articles to copper/aluminium waste and scrap ‘in order to avail and pass on fraudulent Input Tax Credit’.
 
The investigations carried out so far revealed that the number of entities involved in this matter were 23 firms located across India from Tamil Nadu to New Delhi, including six Nagpur-based firms. The places where searches were conducted included Nagpur (Maharashtra), Jalandhar (Punjab), Sonepat (Haryana), and New Delhi.
 
The total value of fake transactions using fake invoices was Rs 434 crore, the fraudulent Input Tax Credit availed of was to the tune of Rs 78.13 crore. The investigations revealed that the declared places of businesses of these entities were residences, and the supporting documents uploaded by these entities had been ‘forged’. As per the DGGI Nagpur Zonal Unit, the modus operandi adopted by these entities was to obtain GST registrations on the basis of documents of unrelated individuals and carry out bogus transactions. The official press release stated, “The entire transactions were carried out only on paper without any actual physical movement of goods.
 
These transactions were routed systematically through this network to make the source as untraceable as possible. The entities deliberately capped the GST involved in the transactions of a single GSTIN below Rs 5 crore to prevent stringent action.” These entities systematically cancelled or stopped using the GSTINs before reaching the threshold limit of Rs 5 crore and obtained new GSTINs using the details of other persons by forming new partnership firms and using the PANs of the new firms to continue their illegitimate activities. The scrutiny of e-way bills generated by these entities also revealed that the vehicles mentioned in the e-way bills generated by these GSTINs were found to be belonging to the class of vehicles such as two-wheelers and three-wheelers incapable of carrying out the transportation activities as mentioned in the e-way bills.