The Anti-Evasion branch of Central Goods and Services Tax (CGST) Commissionerate, Meerut, started an investigation in October 2023 into a large syndicate that fraudulently claimed Input Tax Credit (ITC) by way of fake billing.

The investigation conducted so far has revealed that total number of 232 fake firms, with 91 firms registered on a single mobile number, are registered at various places across the country and have passed inadmissible ITC of around Rs. 1,048 crore. Total value of goods shown to be supplied through these firms is around Rs. 5,842 crore.

Through the use of various analytical tools such as E-way Comprehensive Portal, Advait and Business Intelligence and Fraud Analytics (BIFA), the CGST Commissionerate carried out deeper investigation.

On further investigation, it was revealed that these 232 bogus firms were operated by mastermind Mr. Praveen Kumar, who was filing the GST returns for all the fake firms. Apart from the common mobile number which was used to create and manage 91 firms, 10 more mobile phones and 03 laptops were impounded from the possession of Mr. Parveen Kumar

During the course of investigation, it came to light that ‘Full Fledged Money Changer Companies’ (FFMCs) were used for parking/routing of funds generated through fraudulently passed on ITC. Further investigation revealed bulk purchases of around Rs. 1,120 crore from two of such FFMCs from other FFMCs. However, no record of further disposal/receipt of said foreign currency has been recovered during searches. Owners/ Directors of these two FFMCs, too could not produce any record or details of ultimate recipient of the foreign currency.

None of the firms that issued invoices were found in existence. However, two beneficiary firms that had availed ITC on strength of fake invoices, were existent. Further investigation into these beneficiary firms revealed that in order to justify the fake purchases as genuine purchase, they made payment to two accounts belonging to two forex companies engaged in sale and purchase of foreign currency only and did not deal in supply of goods/services. However, various beneficiaries of fake ITC have transferred money to these accounts purportedly to justify their fake purchase. The accounts being used to carry out these fake transactions were provisionally attached under Section 83 of the CGST Act, 2017.

Five bank accounts that were used to park the proceeds by the syndicate have been provisionally attached. Three persons have been arrested so far for being perpetrator and conspirator in creation of fake firms/ preparation of fake invoices without supply of any underlying goods/services/ passing on of fraudulent ITC to various beneficiaries/ retaining of benefit arising out of the proceeds of GST evasion.

Further investigation is underway.

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NB/VM/KMN

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