The Enforcement and Compliance Management Unit of the GST and Central Excise Department, Chennai North, has arrested three persons for committing GST credit fraud of about Rs 10 crore on invoice value of more than Rs 150 crore.
The case relates to fraudulent taking and passing on of input credit of GST on the basis of bogus invoices without supplying or receiving taxable goods or services and without paying GST.
The case booked was against a well established business entity from Chennai that sells readymade garments through various retail outlets. The managing director of the business entity and two other key individuals involved in the fraud, who were on the run for more than a month, were nabbed by the department, says a press release.
The arrests were made after carrying out a detailed investigation, taking statements and conducting searches to gather evidence. The arrested persons were produced before the Additional Chief Metropolitan Magistrate, Egmore, who remanded them to judicial custody until December 22.
The arrested managing director of the company was the main beneficiary and the mastermind of the fraud. He, in collusion with the other two arrested persons, received bogus invoices issued by fictitious firms established for the sole purpose of issuing such bogus invoices without supplying any goods or services.
The company made payments for these fake supplies through proper banking channels, but got back the money in cash from the fictitious companies after these companies had deducted their commission for issuing bogus invoices. In order to plough the cash back into the company’s account, the arrested persons created four fictitious companies and issued bogus invoices to these companies without making any supplies, the release said.