The Goods and Services Tax (GST) authorities have arrested 215 people, including 81 proprietors, 36 directors, three chief executives, six chartered accountants and one company secretary involved in fraudulently misappropriating input tax credit by using purchase invoices issued by fake companies, a finance ministry official said.
“GST intelligence authorities have found more than 6,600 fake GST registered entities involves in similar fraud. They have so far also booked about 2,200 cases and recovered more than Rs700 crore from these fraudsters,” the official said, requesting anonymity.
Armed with a list of over 6,600 business entities evading GST, the government launched a massive crackdown against GST frauds in November. The action was taken after the Law Committee of the GST Council took cognizance of large scale income tax credit fraud through fake companies.
“In its concerted drive for the past two months across the country against GST fake invoice frauds by fake entities and fly-by-night operators who fraudulently avail, pass on and utilise input tax credit in multi-layered scams, the Directorate General of GST Intelligence (DGGI) and the CGST Commissionerates have so far arrested 215 persons and the drive against tax evasion is under progress,” the official said.
Those arrested not only include fake entities operators but also the end beneficiaries who connive with these fraudsters who are running businesses of fake invoices on commission basis, he said. “Use of data analytics, data-sharing and AI [artificial intelligence] has enabled the government to identify layer-by-layer activities of these fake entities and pinpoint the fraudsters with precise input,” he added.
In August last year, West Bengal finance minister Amit Mitra wrote a letter to Union finance minister Nirmala Sitharaman where he said the total GST fraud might have already crossed the Rs1 lakh crore-mark since July 2017 and the Rs45,682 crore evasion detected by the Centre was understated. HT reported it on August 29, 2019.
Replying to a question in the Lok Sabha on March 2, 2020, minister of state for finance Anurag Singh Thakur quantified total GST evasion at Rs70,206.96 crore between July 2017 and January 2020, out of that, Rs34,591.21 crore was recovered.