Big Rs 7,896-crore fake GST invoice racket busted! This is how they were doing tax evasion

In a major crackdown against fraudulent activities which are in practice for tax evasion, GST officers in Delhi have busted a racket of fake invoicing worth Rs 7,896 crore using a network of 23 shell companies, as per a report in news agency PTI.

The officers of Anti Evasion wing of Central Tax, Delhi West Commissionerate have busted a major racket of fake invoicing of Rs 7,896 crore involving fraudulent Input Tax Credit (ITC) of Rs 1,709 crore, using a network of 23 shell companies, Finance Ministry said in a statement.

What did they do?

These companies procured and generated invoices without the actual supply of goods and availed as well as passed on input tax credit.

Two persons were arrested on February 29, and were remanded to 14 days judicial custody.

How they did tax evasion?

- The accused persons were evading tax by creating several dummy firms for the purpose of passing on input tax credit by generating fake invoices.

- They also used banking transactions to make input tax credit appear genuine.

- These firms issued the fake invoices to buyers, who availed fraudulent input tax credit without actually receiving any goods and defrauded the exchequer by way of availing ineligible input tax credit towards GST liability.