GST officials bust racket for availing Rs 50 cr illegal ITC; 1 arrested

Busting an illegal input tax credit (ITC) racket, GST officials have arrested a wannabe chartered accountant for alleged involvement in passing on ITC of about Rs 50 crore through a web of 115 fake companies, a source said on Friday.

Prince Manish Kumar Khatri, a third-year student and a partner of a CA firm in Ahmedabad, allegedly registered fake firms that were used to avoid paying Goods and Services Tax (GST) by showing bills generated by them as ITC.

In all, ITC of Rs 50.24 crore was wrongfully passed on, the source said.

The source said Khatri is allegedly the key person involved in registration of 115 non-existent firms and filing of GST returns of such fake firms, thus passing on ineligible ITC for wrong availment and utilization for GST payment.

These fake firms are spread over 9 GST Commissionerates and the Directorate General of GST Intelligence (DGGI) has detected the fraud with the help of data analytics.

Out of these 115 fake units, 49 fall under Ahmedabad North Commissionerate; 27 under Vadodara-II Commissionerate; 15 under Bhiwandi Commissionerate; 12 under Gandhinagar Commissionerate.

Besides, 5 units fall under Ahmedabad South Commissionerate; 3 under Jodhpur Commissionerate; 2 under Vadodara-I Commissionerate; 1 under Thane Rural Commissionerate and 1 unit under Bhavnagar Commissionerate.

“Now the use of Aadhaar in GST registration will bring better control over such unscrupulous professionals who try to create bogus/fake firms for GST evasion by fraudulent availment and passing on of ITC," the source said.

The source further said law is being further tightened to have better control on such malpractices.

Moreover, the government is considering putting such dubious firms under risk category like in case of export firms, and can block their refunds, besides taking other appropriate legal actions, if found involved in deceitful practices.