CGST Surat busted a racket who with 19 fake entities issued fake invoices of Rs. 679cr value and Rs 55 Cr fake ITC and got illegal IGST refund of Rs 39cr by exporting inferior goods at inflated price. One Kingpin arrested.
Government of India
Ministry of Finance
CENTRAL GST & EXCISE COMMISSIONERATE : SURAT
CENTRAL EXCISE BUILDING. CHOWK BAZAR, SURAT-395001
Acting on intelligence regarding claim of fraudulent IGST refunds on exports by M/s Gita Fabrics, Surat, as received from Chief Commissioner’s Office, Vadodara, Central GST & Central Excise, Surat Commissionerate has unearthed a case of fraudulent claim of IGST refunds on exports made by Surat based 19 firms including M/s Gita Fabrics, M/s Monika Impex, M/s Radhika Exports and others. Preliminary investigation reveals that these firms received only invoices totally valued at Rs. 679 crores from other non-existing firms/fake firms without receipt of goods, and thereby, availed fraudulent Input Tax Credit (ITC) to the tune of Rs. 55 crores. During the search at the premises of kingpin namely Mr Faiyaz Kherani, Prop. of M/s Satyam Impex and M/s Aatif Fashion, it is observed that 17 firms (other than M/s Satyam Impex and M/s Aatlf Fashion) were registered with GST Department by misusing the identity/documents of daily wagers, casual workers etc.
The above said 19 firms issued Invoices valued at Rs. 461 crores involving IGST of Rs. 39 crores for exports and invoices valued at Rs. 196 crores involving GST to the tune of Rs. 12 crores for domestic supply, thus, totaling to invoices valued at Rs. 657 crores involving GST to the tune of Rs. 52 crores. Against exports by these 19 firms, Mr Faiyaz Kherani has so far received IGST refunds to the tune of about Rs. 35 crores. Sh. Faiyaz Kherani, in his statement, has admitted to have received invoices from various firms without receipt of goods and have availed fraudulent ITC to claim refund of IGST. He has further admitted that they used to purchase cheaper quality textile items from market for export and used the said high value invoices for claiming IGST refunds. He has also admitted that he is controlling nineteen (19) firms who are issuing fake invoices and availing IGST refunds.
Therefore, in this case, a scam of availing Input Tax Credit (ITC) to the tune of Rs. 55 crores on fake invoices valued at Rs. 679 crores without movement of any goods, by floating 19 fake units and illegally claimed IGST refund of Rs. 39 crores by exporting inferior quality goods at extremely inflated price, has been unearthed. This IGST’ on exports were paid by making use of aforementioned fake input tax credit. Mr Faiyaz Kherani has thereby, committed offences as provided under Section 132(1)(b) & (c) of the CGST Act. 2017, which is punishable with imprisonment for a term which may extend to 5 years and with fine. Such offences are cognizable and non bailable and therefore, he has been arrested today evening under section 69 of the CGST Act. 2017. He is being produced before the magistrate for remand.
Further investigation In the case is in progress.
Commissioner, CGST & CE,