The Centre is planning multi-agency action involving the Enforcement Directorate, Finance Ministry, intelligence agencies and state police forces to investigate a mammoth GST fraud unearthed by the Noida Police, News18 has learnt.
Sources told News18 that a central intelligence agency has prepared an initial report based on the preliminary investigation and recommended that multiple agencies be roped in to crack the scam which has reportedly caused the central exchequer a revenue loss of Rs 955 crore so far. Sources added that the amount is likely to go up “multi-fold” as the investigation progresses.
Officials added that initial analysis revealed the scam stretches across multiple states and Union Territories, with Delhi being the epicentre.
The central agencies have planned to initiate criminal investigation prosecution under Sections 120B and 420 of the IPC against the accused who allegedly procured GST numbers using fake credentials and sold it to ‘clients’. The ED may simultaneously open an investigation under the Prevention of Money Laundering Act, sources added.
Officials said several Chartered Accounts running “big firms” may also face action for alleged criminal conspiracy.
Investigating agencies will also individually verify close to 3,700 beneficiaries with the help of state GST authorities and will freeze the linked bank accounts. Entities and individuals that made frequent amendment to their Aadhaar details but had low enrolments will also be under the scanner.
The GST registration of those who procured it using fake credentials will be cancelled apart from other criminal and legal proceedings, officials said.
“An organised gang involved in fake GST input tax credit through a network of fake shell firms and entities was busted by the UP Police under Station Sec-20, Gautam Buddha Nagar on June 1, 2023. A database containing over 6 lakh PAN cards and 2,514 fake firms with GST registrations was recovered. The preliminary evidence suggests a revenue loss of Rs 955 crore (approx.) to the government exchequer,” an official said quoting from an official communication.
Sources said professionals who accepted huge amounts of money in exchange for helping exploit loopholes in the system will be booked under stringent sections as well.
Modus Operandi
The scam pertains to thousands of bogus companies being floated on the basis of forged Aadhaar cards, fake invoices being raised by them and input tax credit (ITC) being claimed on their behalf.
The details of 6 lakh PAN cards were reportedly purchased from online portals and used to forge Aadhaar cards in the name of poor individuals who were paid off. These Aadhaar cards were then allegedly used for GST e-registrations, which were in turn sold to entities that claimed input tax credit.
Analysis of the recovered data sets revealed that 1,407 unique PANs (out of 6 lakh) were used to avail the input tax credit through 1,907 unique source GST numbers (out of 2,514). Further, these 1,907 GST numbers were found to be linked with 741 unique mobile numbers.
A total of 3,745 unique beneficiary GST numbers were found to be associated with 1,907 source GST numbers and received input tax credit worth of Rs 955 crore against the supply value of Rs 5,651 crore. These unique beneficiaries were found to be spread across India, majority being from Delhi, officials said.
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