The arrested trader had issued fake invoices through shell companies, evading tax worth Rs. 14 crore

Mysore/Mysuru: In a major crackdown, the Officers of Headquarters Preventive Unit, Central Tax GST Office, Siddarthanagar, Mysuru, have unearthed a sophisticated fake invoice racket, involving a tax evasion of over Rs. 14 crore for GST bills of Rs. 60 crore.

The fraudulent scheme involved the creation of fictitious units both within and outside the State, issuing fake invoices to portray non-existent transactions and manipulating tax credits to offset legitimate tax liabilities, stated a press release from K.B. Nanaiah, Assistant Commissioner (Preventive and Intelligence), Central Tax, GST Commissionerate (CGST), Mysuru.

The tax evader’s modus operandi included establishing fake units in various locations, issuing false invoices for purported transactions and further generating counterfeit invoices to actual existing units. These entities would then exploit the acquired tax credits to settle their tax obligations, creating a complex web of paper transactions without any real exchange of goods, the press release said. The operation was carried out under the guidance of P.V. Suresh Babu, Principal Commissioner of Central Tax, CGST Commissionerate, Mysuru.

Speaking to Star of Mysore this morning, G.N. Shashidhar, Superintendent, CGST Commissionerate, said that the officers arrested Imran, the Proprietor of Rub Traders, Mysuru, on Jan. 8, 2024. Following the arrest, the accused was produced before the Magistrate, V Judicial Magistrate First Class (JMFC), Mysuru and was subsequently remanded to judicial custody.

“This is a racket which passed on fraudulent Input Tax Credit (ITC) through fake shell entities. The documents and evidence have indicated that in the last two months alone, the racket has issued about Rs. 60 crore worth fake invoice resulting in availing of fake ITC of about Rs. 14 crore, resulting in loss of revenue of multiple crores to the Government Exchequer. The fake invoices help the recipient claim an ITC for a service or goods that was never supplied. This way, they can evade taxes,” Shashidhar explained.

CGST Commissionerate is actively pursuing further investigations to unravel the extent of this tax evasion scheme.

“We are taking a stern stance against such fraudulent activities, not only limited to the issuance of fake invoices but also across various sectors where GST evasion may occur. We will continue our efforts to combat tax fraud and maintain the integrity of the GST system,” he added.