THIRUVANANTHAPURAM: The nationwide ‘areca nut cartel’ busted in a joint operation by the State GST departments of Kerala and Karnataka on Thursday is arguably one of the largest input tax credit (ITC) frauds in the country.Forty-three fake firms with GST registration in different parts of the country were part of the web that created fake invoices to the tune of Rs 850 crore in just ten months. The invoices and corresponding e-way bills were generated without actual trade or supply of goods.
“The investigation would be a tough task since we have to examine records pertaining to numerous transactions conducted by the fake firms. Incriminating evidence was seized from the 27 establishments on Thursday,” said an officer part of the operation.
Besides availing ITC worth Rs 9 crore, the cartel is suspected of having been involved in hawala transactions and converting black money into white. The existence of the cartel was first reported by the GST department’s Intelligence Unit at Kanhangad. The Kerala links of the cartel functioned in Kasaragod, Kannur and Wayanad -- three major areca nut-growing districts.
The cartel was also involved in the unregistered sale and transportation of a large consignment of areca nuts to gutka manufacturing companies in Maharashtra. “The actual seller and buyer would not be in the picture. The cartel would facilitate transportation from one state to another using bills and invoices generated against the accounts of the fake firms. Afterwards, the goods would be recorded as ‘sold’ to small businesses that do not require GST registration. The actual buyers would be large gutkha companies,” the officer said.
Gutkha manufacturers prefer unaccounted raw materials to evade tax. “If the actual intake is recorded in their book, the corresponding output should also be recorded. Gutkha items attract 28 pc GST and cess. Manufacturers can save big money through evasion,” the officer said.Officers suspect the fake firms were also involved in hawala transactions. Also, it would have helped people to convert black money into white.