Fake ITC Claim of Rs 180 Crore: Karnataka’s GST authorities detect 100 bogus firms, arrest mastermind
Karnataka’s Commercial Taxes Department officials have arrested a key mastermind in connection with a multi-state GST fraud centred around fake GST claims.
The operation, spanning over two days and conducted in collaboration with Kerala State GST authorities, revealed significant fraudulent activities, Commissioner C Shikha said in a media statement.
The officials arrested Mohammed Siddiq in Mysuru on Wednesday on charges of acquiring dummy GST registrations using forged documents, and facilitating a scrap business in Kerala, Tamil Nadu, and Karnataka. He issued fake tax invoices to facilitate bogus claims of input tax credit (ITC) by dealers without remitting the taxes to the governments after the initial transactions.
The fraudulent network extended its operations to Kerala and Tamil Nadu. Siddiq used fake GST registrations to unlawfully transfer bogus ITC to fake taxpayers registered in Karnataka. This tactic aimed to offset outward tax liability, evading GST cash responsibility on outward supplies and resulting in substantial losses to the government. The two neighbouring state GST officials extended all support in this important operation, the statement said.
The investigators led by Joint Commissioner of Commercial Taxes (Vigilance), Bengaluru, uncovered a systematic modus operandi by the cartel, with accomplices in Mysuru, Mangaluru, and Kerala providing support. The officials have also detected complicity of some auditors and GST practitioners in the fraudulent activities.
By busting the racket, the department has successfully dismantled a fake ITC racket involving approximately 100 bogus registrations across Karnataka, Kerala, and Tamil Nadu. These entities issued counterfeit invoices totalling Rs 1008 crore, leading to the illegal availing of input tax credit of about Rs. 180 crores by the beneficiaries.
The department warned of stringent action against fraudulent taxpayers engaged in the illicit passing and availing of ITC. These actions aim to curb substantial losses to government revenue.
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