BENGALURU: Two key accused involved in a large-scale fake Input Tax Credit (ITC) fraud of Rs 2,384 crore have been arrested in Bengaluru in a major enforcement action carried out by the Enforcement Wing (South Zone) of the Karnataka Commercial Taxes Department in coordination with the Service Analysis and Intelligence Wing of the Commercial Taxes Department.
Based on specific intelligence inputs collected by the intelligence wing, the department unearthed the highly organised fake invoicing cartel operating through entities purportedly engaged in trading of tungsten carbide scrap, e-waste and other scrap materials, causing a massive loss to the government through fraudulent availment and passing of inadmissible ITC.
According to a press statement by the Enforcement Wing (South Zone) Commercial Taxes Department, the accused are identified as Saleemulla Baig, 49, of SKS Traders, and Hassain Baig, 35, of KH E-Waste Recycler.
“Saleemulla fraudulently availed fake ITC from 72 bogus supplier entities involving suspicious turnover of nearly Rs 2,172 crore and fake ITC of around Rs 382 crore. Similarly, Hassain was found to have availed fake ITC from 55 bogus supplier entities involving suspicious turnover of approximately Rs 212 crore and fraudulent ITC of nearly Rs 38 crore. Both have been arrested under the provisions of GST Act,” the press release stated.
Fake invoicing network involving 127 bogus entities, with aggregate suspicious turnover of about Rs 2,384 crore and fraudulent ITC of nearly Rs 420 crore have been exposed.
The investigation further revealed that one of the principal entities in the cartel had shown an abnormal escalation in declared turnover from nearly Rs 50 crore to Rs 945 crore within the last three financial years, without corresponding business infrastructure or actual movement of goods, indicating large-scale fraudulent paper transactions and circulation of fake tax invoices.
A major aspect unearthed during the investigation was the misuse of high-value tungsten carbide scrap transactions along with e-waste and scrap trading activities.
The tungsten carbide scrap transactions alone involved suspicious turnover of nearly Rs 217 crore and fraudulent ITC of around Rs 39 crore. The department also found that whenever departmental action such as blocking of ITC or issuance of notices was initiated, the fraudsters floated fresh bogus entities and availed new fake ITC in order to continue the fraud and evade detection, according to the press release.
The operation was supervised by Kanishka, Additional Commissioner of Commercial Taxes (Enforcement), and Aparna, Additional Commissioner of Commercial Taxes, Service Analysis & Intelligence Wing.
