Probe reveals shell firms floated only for GST fraud

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Officials from Goods and Services Tax Hyderabad commissionerate, who are probing the case of input tax credit and fake invoices, identified several fake shell companies floated in Telangana and AP only for the purpose of the fraud. A prominent company in the docks is Radha Smelters Pvt Limited. Interestingly, it was found that this Hyderabad-based steel company availed input tax credit issued by three fake companies. It was found that one Bangaru Gari Hari Prasad of Kanakdurga traders in Kadapa district of AP had obtained GST registration by submitting PAN number and other particulars. Investigations revealed that he was working as a helper in engineering division of Kadapa Municipality for the past 34 years, and is not related to Kanakadurga Traders, whose address was found to be fake.

It was found that the company has issued fake invoices valued at Rs 30 crore to several other suitcase companies without a supply of any goods and passed on the input tax credit of Rs 5.2 crore illegally. Ammajan Enterprises, Sri Lakshmi Enterprises of Kadapa, Ambica Traders of Rajahmundry are some other firms which received fake invoices, and all the three firms exist only on paper and were floated for the purpose of the fraud.

Investigations revealed Radha Smelters is involved in huge evasion of GST by way of availing irregular input tax credit based on fake invoices without supply of goods. Searches were conducted on January 10, on the premises of the company. Radha Smelters availed input tax credit of Rs 3.77 crore based on invoices issued by the firms Ambica Enterprises, Ammajan Enterprises and Lakshmi enterprises. In all three cases, it received goods only on paper. Searches revealed Radha Smelters could not account for the finished goods of 288 metric tonnes at Nacharam factory, and 48 metric tonnes of TM bars at Shanakarmpet factory, valued at Rs 1.3 crore and involving GST of Rs 23 lakh. When TOI tried to contact Radha Smelters on its landline number, the management refused to comment.

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