A company whose registered office led sleuths to a barber shop claimed GST refunds of Rs 50 crore through fraudulent returns, leading to a large-scale investigation into what tax officials suspect is a hydra-headed scam with Haryana at the heart of it.
The state government, which has been investigating fraudulent GST returns for several months, on Thursday suspended five excise and taxation officers (ETOS) — Vijender Dhull, Sanjeev Saluja, Suneela Singh, SK Singh and Vikas Prashar — for their alleged involvement. Two other ETOs had been suspended in July after a preliminary probe. Prashar worked in the Gurgaon office of the tax department.
Officials said the scam was masterminded by two chartered accountants who floated multiple fake companies in connivance with the ETOs, and claimed input tax credit on transactions worth more
than Rs 100 crore. With the investigation now spreading to other states, the scale of the scam could grow.
“We took action as per the investigation of Gurgaon police. But after realizing the nexus is spread across Haryana and other states, we have proposed that the inquiry should be handed over to the state vigilance bureau,” said Sanjeev Kaushal, additional chief secretary (excise and taxation department).
The department filed a complaint after it found there was no office of a company named Vipin Enterprises at the address it had given, a barber shop was functioning there instead. An SIT was formed for the investigation and charted accountants Rakesh Arora and Gourav Behl, who was working as an assistant in the excise and taxation department and was responsible for registration and movement of files, were arrested.
Investigators said the two CAs floated more than 40 fake companies in Gurgaon, Panipat and Kaithal. These companies used bogus receipts, in a web of operations involving accomplices in other states, to make fraudulent claims of input tax credit. Vipin Enterprises alone claimed Rs 50.34 crore.
“While tracking the companies, we found one mobile number common across them. Truecaller tracked that number to Rakesh Arora. He led us to another other CA based in Delhi, and subsequently, other fake companies were tracked,” said Kaushal. He added that as the investigation progresses, its scope is likely to increase substantially. Punjab and Delhi are where the probe will focus next.
Sources said more ETOs were under the scanner and could be suspended in the coming days. The ETOs are accused of aiding these frauds by issuing ‘C’ forms to the bogus companies. The C form was issued in pre-GST times, but they are still applicable in some old cases. These forms are issued by a registered dealer to a selling dealer for an interstate purchase to obtain a reduction on sales tax. Without these forms, these companies would not be able to show sales on paper, making them ineligible for input tax credit.
Officials said that ETOs issued the C forms knowing these companies do not exist. Additionally, for input credits above a certain amount, ETOs are required to conduct a theoretical audit and visit companies. In this case, the procedure was not followed.