BENGALURU: In a major breakthrough in an ongoing investigation into a large interstate fake invoicing cartel, the Enforcement Wing (South Zone) of the Commercial Taxes Department arrested a key kingpin involved in generating and routing fraudulent Input Tax Credit (ITC) across multiple states.
In continuation of an earlier case involving fake invoicing activities detected across Karnataka and Tamil Nadu, further investigation revealed that Mohammed Tauqeer alias Mohammad and Shaik Jakeer Hussain alias Basha are the principal masterminds operating behind the scenes.
The duo had floated multiple bogus business entities and were systematically issuing fake tax invoices without actual supply of goods, thereby generating and passing fraudulent ITC to entities in Karnataka, Andhra Pradesh and Tamil Nadu, an official release stated.
The probe revealed that the accused routed such fake ITC to various entities including previously arrested operatives, who in turn passed on the same to works contractors and traders for offsetting their tax liabilities. This mechanism enabled beneficiaries to discharge tax liabilities through ineligible ITC instead of cash payments, causing loss to the government exchequer.
The financial magnitude attributable to this network is at Rs 410 crores of fraudulent transactions involving wrongful ITC of Rs 102.5 crores, the release added.
The modus operandi adopted by the accused reflects a well-structured and evolving pattern, involving frequent creation and cancellation of GST registrations within short durations, continuous change of mobile numbers and bank accounts, operation through multiple layered entities, and functioning in isolated silos to evade detection, the department said.
The accused are from Chittoor, AP , with Mohammed Tauqeer currently residing in Bengaluru and Shaik Jakeer Hussain alias Basha operating from Andhra Pradesh. Their anticipatory bail applications were rejected by the 69th Additional City Civil and Sessions Court, Bengaluru. Despite sustained efforts over the past one month, Shaik Jakeer Hussain managed to flee overseas and remains absconding.
The Department apprehended Mohammed Tauqeer alias Mohammad (aged about 42 years) when he attempted to abscond. He has been arrested for his active role in floating bogus firms and facilitating large-scale fake ITC transactions.
The accused has been produced before the Special Court for Economic Offences, which has remanded him to judicial custody for 14 days. Efforts are underway to trace and secure the absconding accused, the department added.