The GST department, on Monday, has arrested a businessman in North Chennai alleging evasion of Rs. 61 crores of tax by opening ‘fake’ registrations.
The accused, Danaram used fake bills to show expenditure and availed input tax credit, which is illegal, the Tax officials said.
“During a search, a racket of fraudulent companies involved in trading of fake tax invoices for availing input tax credit by dealers of various commodities was unearthed,” said GST principal commissioner (Chennai North) M Sreedhar Reddy.
The fake bills and invoices were being used to trade in gold jewellery, steel, plastics, fabric and timber among other things, said tax authorities who searched multiple locations in and around Sowcarpet where the fake entities of the businessman were located. The searches began on November 15.
“Danaram, the mastermind behind the racket, has been arrested with others under provisions of the GST law,” said Reddy. Danaram is learned to have operated businesses with total revenue of ?352 crore.
“The accused admitted that the said firms did not exist physically. Further investigation is in progress,” the tax commissioner added. Danaram and a man named Kailash, who were part of a group of traders and businessmen in Sowcarpet evading GST, obtained 50 GST registrations together. Kailash is yet to be arrested. “We are now watching other traders in the area,” said the official.
“The modus operandi involved floating fake companies with fake addresses, issuing fake GST invoices and generating e-way bills with fake vehicle registration details. No goods were supplied and the fake companies fraudulently passed on the input tax credit,” said Reddy.