Officials Bust 78 Bogus Firms with Estimated Fraud of INR 470 Crore

Highlights

  1. The raids on these companies were conducted on 11th August 2019 (Wednesday) by 1,200 officers in 337 locations across 27 cities.
  2. The potential fraud is estimated to be around INR 470 crore of input tax credit on an invoice of INR 3,500 crore.
  3. The exporters were exporting goods on payment of IGST almost completely out of the input tax credit claimed on the basis of fake supplies.

The synergy of the Director General of GST Intelligence and the Director General of Revenue Intelligence have discovered dozens of fake companies and exporters who were illegitimately claiming Integrated Goods and Services Tax (IGST) from the government. 

The raids on these companies were conducted on 11th August 2019 (Wednesday) by 1,200 officers in 337 locations across 27 cities. The potential fraud is estimated to be around INR 470 crore of input tax credit on an invoice of INR 3,500 crore. Majority of these firms were small businesses.

“Out of the 198 companies we checked, 78 did not exist,” said by a government official. Majority of bogus firms were located in West Delhi. Out of 53 companies monitored in the capital, 46 were found bogus.

In Mumbai raids, a housewife turned out to be a front for a company, in an another raid a tuberculosis patient who needed INR 10,000 per month to spend on medicines was the frontman and in another case, the team also discovered a drunkard as the owner of the firm.

The officials were baffled and asked “They are proprietors of export firms, can you believe it?”. These people created multiple bogus small firms to keep transactions below INR 1 crore.

The exporters were exporting goods on payment of IGST almost completely out of the input tax credit claimed on the basis of fake supplies. Such IGST payment was claimed as a refund on exports.

The official said “This government was well aware of this and we used data analytics to figure out which all transactions were suspicious. While government is allowing ease of doing business you cannot shortchange the honest taxpayers. The next round of raids will take place soon. Another list is being prepared.”

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  1. Nationwide raids find bogus firms, fraudulent GST claims
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