Rs. 107 Crore GST Credit Fraud through Input Tax Credit
Chennai, 16 September 2020 – GST and Central Excise Department, Chennai Outer has arrested a 56 year old person from Kodungaiyur area of Chennai city for committing a GST credit fraud of Rs. 107 Crore.
The case against the arrested person is that he along with some others has taken GST registration in the name of other persons on non-existent addresses using doctored documents. These fictitious companies issued tax invoices to various business entities without supplying any goods or services to facilitate, for a commission, fraudulent availment of GST credit by these business entities. GST on such bogus invoices was also paid using input tax credit based on fraudulent tax invoices received from some other fictitious companies opened by the associates of the arrested person and his accomplices. In the process, GST credit fraud of Rs. 107 Crore on invoice value of Rs. 740 Crore was committed by the arrested person along with his accomplices.
This is just tip of the iceburg. Input Tax Credit claimed is 400% of GST collected. This provides ample opportunity for fraud.
This is why we have been recommending to government to make GST a good and simple tax by having only three rates of 0%, 5% and 15% without Input Tax Credit to avoid such frauds and make lives of business men simple as only one return will be required to be filed.
The case against the arrested person is that he along with some others has taken GST registration in the name of other persons on non-existent addresses using doctored documents. These fictitious companies issued tax invoices to various business entities without supplying any goods or services to facilitate, for a commission, fraudulent availment of GST credit by these business entities. GST on such bogus invoices was also paid using input tax credit based on fraudulent tax invoices received from some other fictitious companies opened by the associates of the arrested person and his accomplices. In the process, GST credit fraud of Rs. 107 Crore on invoice value of Rs. 740 Crore was committed by the arrested person along with his accomplices.
This is just tip of the iceburg. Input Tax Credit claimed is 400% of GST collected. This provides ample opportunity for fraud.
This is why we have been recommending to government to make GST a good and simple tax by having only three rates of 0%, 5% and 15% without Input Tax Credit to avoid such frauds and make lives of business men simple as only one return will be required to be filed.
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