GST Intelligence busts 220 cr fake invoices racket in Tamil Nadu

The Directorate General of GST Intelligence has busted a racket involved in issuing fake invoices for goods worth over Rs 220 crore without supplying goods, during recent raids in firms in Chennai and Madurai. 

By creating fake invoices, the members of the racket had collected over Rs 40 crore as input tax credit from the department. 

Two persons based in Chennai, who are believed to have orchestrated the entire fraudulent scheme, were arrested and 27 bank accounts were provisionally attached. Cheque books, with pre-signed leaves, linked to 45 bank accounts, rubber stamps in the names of 30 companies, computer hard disks, mobile phones with incriminating message exchange trails have been seized, a communication from K Balaji Majumdar, additional director general, DGGI said on Sunday. 

These shell firms, by creating fake invoices for Rs 220 crores without supplying goods has passed off Rs 40 crore of illegal and illegible input tax credit (ITC) since June this year. ITC was taken, without receiving goods on which no tax was paid.

The modus operandi included creation of several bogus companies and bank accounts using PANs and Aadhaar numbers of family members, friends, employees to begin with. It then went on to create a complex maze of transactions without supplying goods, duly making payments in respect of bills so traded and then sharing the money through hawala.  The two arrested men also provided fake invoice challans.

A senior GST intelligence official noted that they are widening the probe and would soon nail down the other beneficiaries. They would have to return the money with interest, the officer added. The masterminds of this big network of frauds were ready with their plans two months before GST was implemented, sources added.

The modus operandi included creation of several bogus companies and bank accounts using PANs and Aadhaar numbers of family members, friends, employees to begin with. It then went on to create a complex maze of transactions without supplying goods, duly making payments in respect of bills so traded and then sharing the money through hawala. 

The two arrested men also provided fake invoice challans.