Four Men arrested for Rs 500 crore GST fraud in West Bengal

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The department of central goods and services tax and central excise (Kolkata South) has arrested four men for making false GST claims and getting an input tax credit (ITC) in the name of a network of fake firms, registered on paper in Kolkata and Howrah. The case, GST office in Kolkata indicated, involved defrauding the exchequer of Rs 500 crore. The mastermind, Pankaj Bagla, has been remanded in a week’s departmental custody by the Chief Judicial Magistrate Court of Alipore, the rest have been sent to judicial custody for two weeks According to a GST source, the web of shell companies had claimed an input tax credit for trading goods. ITC is a tax component a businessman pays while buying raw materials and the amount can be used to reduce tax liability during the sale of the finished products.

The businessman can claim the credit on the GST he has already paid during the purchase of the raw materials. They arrested four allegedly created fake invoices against fictitious business deals and supplies and claimed ITC, to the tune of Rs 197 crore, from the government in the name of the 86 shell companies. “Bagla, the mastermind, had been running this web for some time and defrauded the exchequer. We have sought his departmental custody. All the four have been booked under Section 132 of the GST Act,” said a CGST official. Sources said an alert circular was issued against National Trading Company, one of the shell firms, used to route money. All the 86 companies kept floating false tax invoices, with National Trading Company, which existed only on paper, collecting ITC, worth Rs 21.3 crore. The highest ITC that of Rs 101 crore was claimed by another fake firm, named Exacom Enterprise, an officer said. “The investigation report is yet to arrive from other parts of the country, but it is estimated that the ITC collected on false claims would be around Rs 500 crore,” the department said in a petition filed with the ACJM court.

After the CJM court rejected the anticipatory bail plea of an accused person, the department arrested Bagla and his associates, Vishnu Kumar Singhania, Rajiv Kyal and Sandip Kyal. Like the National Trading Company, 10 other firms existed only on paper. “It is a matter of concern. A number of people are being arrested who are simply employees of the companies,” said Anirban Guha Thakurta, who deals with GST evasion cases at Alipore. But the accused persons’ lawyers claimed at the CJM court that they were being falsely implicated. “Prosecution has nothing to show their involvement. Moreover, they had allegedly merely tried to evade tax, did not actually execute it,” said a lawyer.

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