Introduction: The Commercial Taxes Department (CTD) of Bengaluru’s South Zone recently brought to light a massive fraud scheme involving fake GST bill operations. The operation is one of its kind where fraudulent invoicing in the service sector was unveiled.
The Extent of the Scam: The Enforcement Wing’s investigation unearthed a syndicate that assisted companies in the manpower and labour supply sector to falsely avail Input Tax Credit (ITC) and artificially inflate their turnover. Approximately 30 fake entities were set up, leveraging the credentials of family members, acquaintances, and others.
Financial Implications: The transactions under this scam amounted to a staggering turnover of Rs.525 Crores. Even more concerning is the suspected revenue loss of roughly Rs. 90 Crores to the government due to these malpractices.
The Masterminds: After thorough investigation, the enforcement officers successfully arrested two principal suspects, Guru Prakash H M and Manjunathiah H M. Given the gravity of the case and the extent of involvement, it is anticipated that more arrests will ensue.
The Government’s Response: With tax evasion and fraudulent invoicing posing a significant threat to the economy, the Department of Commercial Taxes of Karnataka is actively considering stern actions against these malpractices. Those found guilty could face severe penalties, including arrest, prosecution, imprisonment, hefty fines, and the confiscation of properties and bank accounts.
Conclusion: The expose of this large-scale GST scam underscores the government’s commitment to curb tax evasion and fraudulent practices. It sends a clear message to potential perpetrators about the risks of engaging in such illicit activities. As we move forward, one hopes for stricter regulations and more vigilant enforcement to ensure a transparent and fraud-free economic environment.
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Fake GST Bill operators are busted by CTD
Around 30 fake entities were floated among family members, relatives, friends and other persons in manpower supply services. The Enforcement Wing, South Zone has busted a “Fake GST Bill operators” having turnover of Rs. 525 Crs
PRESS RELEASE
The Enforcement Wing, South Zone, Bengaluru of Commercial Taxes Department, Government of Karnataka has busted a “Fake GST Bill operators” racket who used to run a syndicate to help companies in the service sector of manpower and labour supplies to avail fake Input Tax Credit (ITC) and to inflate the turnover artificially. This is the first of its kind of operation where fake invoice racket in the service sector is busted.
The Enforcement Wing’s probe has revealed that around 30 fake entities were floated using the credentials of family members, relatives, friends and other persons. While the transaction under the scanner involves a total turnover of Rs.525 Crores, the enforcement wing suspects a revenue loss of approximately Rs. 90 Crores to the government. The enforcement officers arrested two alleged masterminds namely Guru Prakash H M and Manjunathiah H M on the dawn of the 30th day of August 2023. More Arrests are likely to follow in this matter.
In this pursuit, the Department of Commercial Taxes of Karnataka is rigorously contemplating strong action against fake invoicing and tax evaders. Fake invoicing and tax evasion in GST can result in the arrest, prosecution and imprisonment of those involved, along with other such measures as fines, penalties, confiscation of goods and provisional attachment of properties and bank accounts.
Sd/-
(C. Shikha, I.A.S.)
Commissioner of Commercial Taxes (Karnataka)
