I-T dept busts network of money changers in GST ITC scam
The Income Tax department (IT) has unearthed a network of 232 fake money changing companies and detected tax evasion amounting ₹1,000 crore through fraudulently generated Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime.
Giving details of the fraud, the Chairman of Central Board of Indirect Taxes and Customs (CBIC), Sanjay Kumar Agarwal, said that the incident came into light when the Meerut CGST Commissionerate busted a syndicate of firms fraudulently claiming ITC. “Interestingly, the investigation revealed that ‘Full Fledged Money Changer Companies (FFMCs) were used for parking/routing of funds generated through which they fraudulently passed on ITC without any real recipient of the foreign currency,” he said.
“Three persons have been arrested for their role in the entire fake billing racket,” he said.
FAKE REGISTRATIONS
Fake invoice refers to no real supply of goods or services with a real invoice issued, which is fraudulently used to avail ITC. Unscrupulous elements misuse the identity of other persons to obtain fake/ bogus registration GST to defraud government.
Such fake/nongenuine registrations are used to fraudulently pass on input tax credits to unscrupulous recipients by issuing invoices without any underlying supply of goods or services or both. Fake registrations and issuance of bogus invoices for passing off fake ITC have become a serious problem, as fraudulent people engage in dubious and complex transactions, causing revenue loss to the government.
Last month a scam was unearthed in Uttar Pradesh too with fraudsters using hand pumps for claiming fake refunds using Inverted Duty under the
Structure (IDS) under GST mechanism.
Taxes on inputs can be deducted from tax on final product and net is deposited with the government. However, this is not possible under IDS, where inputs attract tax at higher rates while it is lower for final product. So, under IDS, taxpayer gets refund. Very few goods under GST fall into IDS category and hand pump is one of them.
Lucknow Zonal Unit of Directorate General of GST Intelligence (DGGI) booked a case after officers gathered that three Agra based taxpayers were availing fake Input Tax Credit (ITC) on the raw material allegedly for manufacturing hand pumps.
The fake ITC on raw materials (attracting GST at 18 per cent) was further used to issue fake invoices of hand pumps (attracting GST at five per cent) to non existent entities without any actual manufacturer and supply.
A total of ₹15.27 crore of evasion detected, out of which ₹5.21 crore was deposited voluntarily by the accussed. Earlier, Finance Ministry reported that over 29,000 fake firms were identified and over 44,000 crores of GST tax evasion detected in a nationwide drive between May and December of 2023. It was planned that details of such identified suspicious GSTINs, jurisdictionwise, would be shared with the concerned State/Central Tax administration to initiate a verification drive and conduct necessary action. If, after detailed verification, it is found that the taxpayer is nonexistent and fictitious, action will be initiated for suspension and cancellation of the taxpayer’s registration.
Bhutanese Prime Minister Dasho Tshering Tobgay and Indian premier Narendra Modi discussed a wide range of economic, trade and strategic issues, at their bilateral meeting in New Delhi on Thursday.
“Glad to meet my friend and PM of Bhutan Tshering Tobgay on his first overseas visit in this term. Had productive discussions encompassing various aspects of our unique and special partnership. I convey heartfelt thanks to His Majesty the King of Bhutan and PM of Bhutan for inviting me to visit Bhutan next week,” Modi wrote on social media following the bilateral meeting
The two leaders are likely to have discussed development projects and pacts in areas such as food and energy conservation, as well as geopolitical concerns regarding Bhutan’s boundary talks with China, sources tracking the development said.
Tobgay will be in India from March 1418, accompanied by a highlevel official delegation that includes ministers of foreign affairs, commerce and energy, as well as senior government officials, according to the Ministry of External Affairs.
The Bhutanese Prime Minister’s India visit, which is his first foreign trip after his reelection in January this year, is especially important as the country has launched a ₹1,500crore economic stimulus package with India’s assistance. The PM’s visit also holds geopolitical significance, as China has reportedly resumed its talks with Bhutan to resolve a boundary dispute that may have implications for India and the regional security, according to sources.
“The visit of the Prime Minister of Bhutan will provide an opportunity to the two sides to review the progress in our unique partnership and to discuss ways and means to expand the enduring ties of friendship and cooperation between India and Bhutan,” an MEA statement said.
FIVE-YEAR PLAN
India has offered increased support to Bhutan as it embarks on its 13th Five Year Plan in a bid to transform into a highincome economy by 2034. Under the 12th Five Year Plan, India has implemented 82 projecttied assistance projects and 524 highimpact community development projects in Bhutan, according to the government.
The Union Cabinet recently approved the signing of two agreements with Bhutan recently. The first is an agreement between the Bhutan Food and Drug Authority (BFDA) and the Food Safety and Standards Authority of India (FSSAI) for cooperation in food safety; and the second is a memorandum of understanding between India’s Bureau of Energy Efficiency and Bhutan’s department of energy for cooperation in energy efficiency and energy conservation measures.