Fake GST racket invoice busted, 2 Mumbai-based Chartered Accountants among 258 arrested

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Eight Chartered Accountants among 258 persons have been arrested so far in the nationwide drive against fake GST invoice frauds since mid-November, 2020. Among the 8 arrested Chartered Accountants, 2 are Mumbai-based.

DGGI sources said that the 8th Chartered Accountant was arrested on Saturday (January 22) along with his four business accomplices in Jaipur for operating 25 fake firms to fraudulently avail and pass on Input Tax Credit (ITC) through bogus invoices without actual supplies of goods/services.

Sources said that out of the 258 arrested so far, at least two persons have been booked under COFEPOSA (Conservation of Foreign Exchange and Prevention of Smuggling Activities Act) also. The drive by GST intelligence and CGST authorities is underway with more than 2500 case booked against 8000 fake GSTIN entities as of now. Authorities have recovered more than Rs 820 crore from these fraudsters.

Also, that the chartered accountants' regulatory body, namely, the Institute of Chartered Accountants of India (ICAI) have been informed about these arrests and have been asked to take appropriate actions as per their own rules.

"CA's arrested in multi-layered fake GST invoice frauds via multiple bogus firms were based out of Jaipur, Mumbai, Chennai, Ahmedabad, Hyderabad and Ludhiana. They all were allegedly operating multiple non-existent firms and fake entities to dupe the exchequer with fraudulent ITC utilisation in connivance with fraudsters and fly-by-night operators.

DoR sources acknowledged that with complete data sharing among GST, customs and income tax, and apt use of Data Analytics and AI (Artificial Intelligence) & ML (Machine Learning), the GST intelligence authorities have been able to pin-pointedly identify those indulged in tax evasion through various means including fake bills and also those availing these bills through layers of intermediaries.

It was further stated, "It is through such systemic changes, the department has now been able to take targeted actions against fraudsters and tax evaders. It is with these measures that the Directorate General of GST Intelligence (DGGI) has not only been able to unearth the fake firms but also the final beneficiaries of ITC frauds, like in the ITC scam in manpower services allegedly by big companies like a well-known food delivery chain and a subsidiary of an e-com giant."

It may be noted that this concerted nationwide drive against bogus GST invoice fraud has ensured better GST compliance to identify tax evaders and those availing input tax credits fraudulently, and thus, has resulted in record GST collection to the tune of more than Rs.1.15 lakh crore for December, 2020. Also, this has resulted in an increase in the number of GSTR 3B return filers to more than 87 lakh in the month of December, the official concluded.