The Directorate General of GST Intelligence (DGGI) is likely to direct the Institute of Chartered Accountants of India (ICAI) to take action against 3 chartered accountants (CAs) arrested for their alleged involvement in generating bogus bills to fraudulently avail input tax credit (ITC) under the Goods & Services Tax (GST) regime, 2 officials said.

The 3 have been arrested as part of the Govt’s nationwide drive against the GST frauds, the officials added requesting anonymity.

ICAI is a statutory body established under the Chartered Accountants Act for regulating chartered accountancy in India. The Institute functions under the administrative control of the ministry of corporate affairs. The ICAI is the 2nd largest professional body of CAs in the world.

The DGGI & the Central GST Commissionerate continued their drive against fraudsters. It has arrested 41 people, including 3 CAs & a Chennai-based businesswoman, as part of the drive. The 3 CAs are from Hyderabad & Ludhiana.

DGGI (Hyderabad) arrested one CA for his role in arranging & organising fake invoices of fictitious firms for one company that led to fraudulent claims of ITC worth Rs 27.4 crore. Another CA from Hyderabad was arrested for a similar crime resulting in fraudulent claims of ITC worth Rs 10.37 crore.

A Ludhiana-based CA was arrested for his role in creating three fake firms, through which he fraudulently availed of ITC & monetisation of ITC through refunds & bogus billing.

Using tools such as artificial intelligence & data analytics on the e-way bill portal, it could be established that these firms had a common set of ghost partners. They generated bogus bills worth Rs 158 crore, involving fake ITC of more than Rs 21 crore & monetisation of fake ITC of over Rs 5 crore through cash refund, one of officials said.

The 2nd person, who works for DGGI, said, “With total 41 arrests of GST fraudsters so far, the agency has filed 577 cases against 2,221 identified entities in the eighth day of its drive against the GST fake invoice frauds.” Recent arrests were made in Gurugram, Nagpur, Kolkata & Mumbai, he added.

The Govt is also tightening the procedure for new GST registration to check frauds.

The first person said that “The businesses, whose owners or promoters do not have commensurate income-tax payment records, will require physical & financial verification before their companies can be given GST registration".

Explaining the menace, he said, fake invoices were not only issued for availing ITC fraudulently but also for activities leading to tax evasion, bank loan fraud, money laundering, & hawala transactions. “These activities have been largely carried out by non-existent or fly-by-night firms & by using a network of firms to game the system to usurp ITC on the commission basis,” he added.

These activities have been carried out, primarily, by those elements who have exploited the ease of doing business conveniences in the existing system by getting a GST registration easily & quickly. They took advantage of the liberalised norm for grant of registration in GST. 

Source Link

Picture Source :