Several major infra companies which are into government projects like irrigation and other works in Telangana and Andhra Pradesh along with iron and steel companies that are supplying fake invoices to them are now under the scanner of GST Intelligence sleuths. Two cases one by GST Intelligence and another by GST Hyderabad commissionarate — linked fake invoices and illegal input tax credit scam which revealed that infra companies are the ultimate beneficiaries. The modus operandi was found to be the same to the case unearthed by I-T sleuths in October 2018 in which Rithwik Projects Private Limited, owned by the family of TDP MP CM Ramesh, and Raghava Constructions, owned by the family of TRS MP Ponguleti Srinivas Reddy, were allegedly involved.
IT sleuths found suspicious transactions worth crores to shell companies in the name of subcontractors in Delhi. It was alleged that the cash was withdrawn ultimately in a maze of transactions where there is no actual service by subcontractors. Though the findings have been rejected by both the politicians, I-T is still investigating the cases. CM Ramesh said that the raids were politically motivated. Confirming that similar modus operandi is rampant in steel industry, linked to certain infra companies, the GST Intelligence sleuths unearthed fake invoices worth Rs. 680 crore and input tax credit fraud. Sources said that circular trading was found where cash is withdrawn after a series of transactions and given to the infra companies by raising fake invoices.
“During service tax regime too, tax evasion was rampant in steel industry. Cement manufacturers are fewer in number and it is easy to establish a chain of transactions. But in steel industry, there are several rolling mills, distributors and local smelting factories of scrap iron making it is easy to evade 18% GST. Apart from tax evasion, fake invoices are created for converting legitimate cash into black money and also availing input tax credit on the sales that never happened,” said a source in GST wing.