DGGI detects fictitious GST refund scam in J&K, Ladakh worth crores

Fake firms floated to claim refund, CAs under radar
Excelsior Correspondent
JAMMU, Dec 6: The Jammu Regional Unit of Directorate General of GST Intelligence (DGGI) has come across major Input Tax Credit (ITC) scam running into more than Rs 1000 crores in which certain unscrupulous elements had floated fictitious firms to claim GST refund. A number of Chartered Accountants (CAs) are under scanner of the DGGI for facilitating the scam.
Large number of persons have benefited from the scam across the Union Territories of Jammu and Kashmir and Ladakh and the GST Intelligence Jammu has succeeded in recovering an amount of Rs 3.7 crore from the beneficiaries in Jammu and Kargil districts, official sources told the Excelsior.
They said the officers from Regional unit of the DGGI headed by Dr Iftakhar A Chowdhary, Deputy Director by using data analysis tools unearthed fake supplies of goods values more than Rs 1000 crore by over 50 fake entities across Jammu and Kashmir.
“These fake entities had transferred fraudulent Input Tax Credit of more than Rs 100 crore to many end users across several States including few identified in Jammu and Kargil districts in the Union Territories of Jammu and Kashmir and Ladakh,” the sources said.
They added that from the beneficiaries located in Jammu and Kargil districts in the two Union Territories of Jammu and Kashmir and Ladakh, a total of Rs 6 crore Input Tax Credit has been availed using fraudulent means. However, out of this amount, the Department has recovered an amount of Rs 3.7 crore in cash.
Sources said the Directorate General of GST intelligence, a premier Intelligence agency of the Ministry of Finance, Government of India, has started a major action against fake entities across the country involved in GST fraud by way of transferring fate ITI to businesses, which is used to offset tax liability of these beneficiaries.
During the drive, sources said, the DGGI has arrested more than 100 masterminds across the country for making fake entities. A total of 3000 fake entities have been identified while nearly 900 cases have been lodged.
“The beneficiaries in the Union Territories of Jammu and Kashmir and Ladakh including Jammu and Kargil districts are in the process of being identified to recover amount from them,” sources said but added that the process will take time.
According to them, the scam has also been traced in Kolkata (West Bengal), Gujarat and New Delhi and at all these places fake firms have been created to claim GST refund by the unscrupulous elements.
While the DGGI is in the process of identifying the beneficiaries and facilitators of the Input Tax Credit scam, sources said a number of Chartered Accounts especially in New Delhi are under scanner of the investigating agency.
It may be mentioned here that earlier, the Directorate of the Goods and Services Tax Intelligence had in March this year detected fraudulent Input Tax Credit claims totaling Rs 150 crore after a series of raids.
GST intelligence officials had conducted raids at units in Jammu and Kashmir, Delhi and Uttar Pradesh, finding most of them to be fake companies.
The dummy firms had purportedly supplied goods worth Rs 1,500 crore to help claim ITC of about Rs 150 crore in the past two years.
The two Srinagar-based units used to get fake bills from the dummy firms and then claim ITC refunds from the Government.
The accused had later deposited Rs 6 crore with the GST authorities.
Under the ITC, manufacturers can deduct tax on inputs for their businesses from the amount that has to be paid to the Government.