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CGST Chennai North Commissionerate has arrested a tax evader for fake invoicing by floating several fictitious companies and committing serious offence of issuing invoices without supply of goods and fraudulently passing on ineligible ITC under section 69 of the CGST Act, 2017.

Rs.43.58 Crore GST fraud detected, one arrested


The Headquarters Preventive Unit of Chennai North GST and Central Excise Commissionerate has arrested yet another tax evader for committing GST fraud by floating several fake companies and receiving and passing on illegal, fraudulent and ineligible input tax credit to the extent of Rs.43.58 Crore with taxable value of more than Rs.238.57 Crore. The arrested is a 40 year old from Parrys area of Chennai city.

Hand showing GST fraud word through magnifying glass

The arrest was the culmination of sustainable evidence gathered during multiple searches carried out as part of in-depth investigations. The arrested individual was produced before the Additional Chief Metropolitan Magistrate, Egmore and was remanded to judicial custody until 20th October 2021.

The case against the arrested person is that he obtained registration for 5 business entities using his own and his father’s identity-related documents. The purpose of floating these fictitious business entities was to commit GST credit frauds. He received and issued fictitious invoices using these business entities to various other business establishments without supplying any goods or services to facilitate fraudulent availment of GST credit by these establishments. In the process, GST credit fraud of Rs.43.58 Crores on invoice value of Rs.238.57 crores was committed by the arrested person. Despite being issued multiple Summonses, said person was deliberately evading investigation since September 2019. He appeared before the investigation on 07.10.2021 and in his voluntary statement dated 07.10.2021 he admitted the offences committed by him as detailed above.

While the GST department is committed to non-adversarial tax administration and it assists honest and law abiding taxpayers in complying with the tax laws, it is in data-driven pursuit of all those fraudsters indulging in GST credit frauds.

All the taxpayers are advised to check the legitimacy of input tax credit before taking such credit. They must not fall prey to GST credit fraudsters. The burden of proof for the eligibility of input tax credit under the GST law is on the person who takes such credit. Taking or passing on fraudulent GST credit attracts penalty equivalent to such GST credit taken or passed on fraudulently in addition to imprisonment for a period up to five years. Tax crimes not only undermine tax law enforcement but also negatively impact honest taxpayers.

GST credit frauds by preparing fake invoices is a serious offence as the perpetrators of such offence and those who abets or any way concerns himself with such acts is punishable with imprisonment and fine under Section 132 of Central Goods and Services Tax Act, 2017. Such frauds have serious economic and security implications. In this context, this office welcomes and encourages whistleblowers to share credible information on any individual or a group of individuals indulging in such grievous tax crimes. This office assures that the identity of whistleblowers will be kept confidential and protected.

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May 2024