CUTTACK: The Orissa High Court has expressed grave concern over increasing trend of Goods and Services Tax (GST) fraud involving creation of dummy and non-existent firms as they are having huge ramification on revenue collection by the State.
The concern was expressed while dismissing the bail petition of a person accused of committing GST fraud by way of fake and fraudulent transactions that had caused huge loss to the tune of Rs 122.67 crore to the State exchequer.
Justice SK Panigrahi said, "The manner in which the accused in collusion with other accused has been operating would suggest that there are certain inherent flaws in the GST system, which is prone to such abuse. Furthermore, the fraudsters are taking advantage of the inadequacy of electronic trails of all transactions by employing ingenious methods."
The case in hand indicates the increasing trend of GST fraud by creating many fake firms. It appears that a large number of cases have now emerged in different parts of the country, where such persons, with vested interests, have created a host of unscrupulous and bogus entities, he observed.
"These fake entities are then used for the purpose of indulging in issuing of false and fabricated invoices without actual movement or supply of goods and services and without payment of any GST to the public exchequer, but for the purpose of claiming Input Tax Credit by defrauding the revenue," he said. Input Tax Credit (ITC) is an option in GST which allows the traders to claim credit for taxes paid on purchase.