The Hyderabad GST Commissionerate is in hot pursuit of a massive fraud involving several shell companies allegedly linked to Andhra Pradesh-based industrialist-turned-politician YS Chowdary. The GST evasion is believed to be upwards of Rs 500 crore and transactions of about Rs 2,000 crore have been found to be fictitious without any movement of goods. Investigators have found that the dummy companies existing only on paper are linked to the former union minister.
Sridhar Reddy Satya Jagan Nagari, director and partner of Bharani Commodities Pvt Ltd, Infiniti Metal Products India Limited and Hyderabad Steel Pvt Ltd was arrested and sent to judicial remand of fourteen days by the Nampally Economic Offences Court on Tuesday. Balarama Krishnaiah, the managing director of EBC Bearings and partner of BRS Enterprises & Trading Ltd, is likely to be arrested. “He has approached High Court to restrain the authorities and the matter has been adjourned to March 18,” said sources. A series of inspections led to initial findings that fictitious transactions running into crores of rupees were not only used to avail fraudulent input tax credit worth around Rs 225 crore, but, in a first, the GST returns filed fraudulently were also used as collateral to raise loans from scheduled banks to the tune of Rs 700 crore.
Most of the loans have not been repaid and all the shell companies were going to be shut down citing huge losses, said sources.According to officials, a total of eight shell companies involved in the case have links to Sujana Group of Industries. The total transactions of the dummy firms run into Rs 1,284 crore by means of issuing fake invoices without any movement of goods and commodities. Using these fake invoices, an input tax credit of Rs 225 crore has been fraudulently availed in the last 18 months.
Sleuths on February 27 raided offices of Sujana Group of Companies and seized incriminating documents. “It is just the tip of the iceberg. Another 10 shell companies have been identified. Total fictitious transactions will be upwards of Rs 2,000 crore, with GST evasion of up to Rs 500 crore. As of now, only Rs 2 crore of the Rs 225 crore has been paid back to the government,” said an official. Former union minister and Rajya Sabha MP YS Chowdary is the founder and former director of Sujana Group of Companies. The group of companies is under the radar of various investigation agencies including Enforcement Directorate, IT, CBI.