Pramesh S Jain
In a major crackdown on GST fraud,the Enforcement Wing (South Zone) of the state Commercial Taxes Department, in coordination with the Service Analysis and Intelligence Wing,has unearthed a massive fake Input Tax Credit (ITC)cartel involving fraudulent transactions worth Rs.2,384 crore.Two key accused have been arrested in Bengaluru.
Acting on specific intelligence inputs,officials exposed a highly organised fake invoicing racket allegedly operating through bogus firms engaged in trading of Tungsten Carbide scrap,e-waste and other scrap materials.
The cartel is accused of causing huge losses to the Government exchequer through fraudulent availment and passing of inadmissible ITC.
According to the department,Saleemulla Baig (49), proprietor of SKS Traders,allegedly availed fake ITC through 72 bogus supplier entities involving suspicious business turnover of nearly Rs.2,172 crore and fraudulent ITC claims amounting to around Rs.382 crore.
Similarly,Hassain Baig (35),associated with KH E-Waste Recycler at Nayandahalli,was found to have availed fake ITC from 55 bogus supplier entities involving suspicious turnover of approximately Rs.212 crore and fraudulent ITC of nearly Rs.38 crore.
Both accused have been arrested under provisions of the GST Act.
Officials said the investigation has so far identified a fake invoicing network comprising 127 bogus entities, collectively linked to suspicious transactions worth around Rs.2,384 crore and fraudulent ITC claims totalling nearly Rs.420 crore.
Investigators also found that one of the principal firms in the network showed an abnormal rise in declared turnover from around Rs.50 crore to Rs.945 crore within three financial years despite lacking adequate business infrastructure or evidence of actual movement of goods, indicating large-scale paper transactions and circulation of fake tax invoices.
A significant part of the fraud reportedly involved high-value Tungsten Carbide scrap transactions, along with e-waste and scrap trading activities.
The Tungsten Carbide transactions alone accounted for suspicious turnover of nearly Rs.217 crore and fake ITC claims of about Rs.39 crore.
The department further revealed that whenever authorities initiated action such as blocking ITC or issuing notices,the accused allegedly floated fresh bogus firms to continue fraudulent activities and evade detection.
The operation is being jointly supervised by Additional Commissioner of Commercial Taxes (Enforcement),and Additional Commissioner of Commercial Taxes,Service Analysis and Intelligence Wing.
Officials said the investigation is continuing and further action,including recovery proceedings, attachment of assets and criminal prosecution against other beneficiaries and accomplices linked to the cartel, is under way in accordance with law.
The statement was issued by the Enforcement Wing (South Zone), Commercial Taxes Department, Government of Karnataka.
