Rs 200-cr fake GST bill scam exposed

Ruchika M Khanna

Tribune News Service

Chandigarh, June 5

Can 100 tonnes of iron scrap be transported all the way from Agra to Fatehgarh Sahib on a scooter? While looking for an answer to this question, the Punjab Excise and Taxation Department unearthed a fake GST bill scam worth Rs 200 crore.

A Fatehgarh Sahib-based company, Maa Chintpurni Alloys, reportedly mentioned the vehicle registration number of a scooter in the GST bill given to another firm. Though the firm showed that the scrap was transported on a truck, the registration number was found to be that of a scooter. This exposed the scam in the three steel towns of the state — Fatehgarh Sahib, Mandi Gobindgarh and Ludhiana.

Sources in the Excise and Taxation Department told The Tribune that Maa Chintpurni Alloys and Shree Pawan Enterprises were found involved in supplying fake GST bills to steel furnaces without actually supplying any goods to them.

It is estimated that the two companies have supplied fake bills worth Rs 100 crore each and evaded tax of Rs 18 crore each (Rs 36 crore in all). “We have already cancelled the GST Identification Numbers of these two companies. We have also written to the Fatehgarh Sahib SSP for registering an FIR against them,” a senior officer said.

This is the second such scam in the state ever since the GST was rolled out in July last year. The earlier scam was unearthed in Ludhiana in January. Unscrupulous dealers were buying GST bills for goods that attract low tax from small retailers and then selling them to big companies so as to enable them to claim input tax credit; allow movement of “unaccounted” goods to other states; and, justify unrecorded transactions.

Excise officials say since they are now scanning all GST returns filed in Punjab, they have been able to detect such frauds. “Our probe has revealed that the purchase and sale of fake GST bills, involving large amounts, is rampant in hosiery and readymade garments businesses, besides iron and steel industry,” said a senior official. He said efforts were being made to trace the companies that purchased fake GST bills.

Vivek Pratap Singh, Excise and Taxation Commissioner, told The Tribune that they had started a drive to plug loopholes in the GST tax collection. “Since we are short of the total expected revenue from the GST, we are strictly monitoring any evasion. We are scanning the GST returns, which is helping us detect such frauds,” he said.

Modus operandi 

• Two Fatehgarh Sahib-based companies sold GST bills to steel furnaces without actually supplying any iron scrap to them. 
• The furnaces already have stockpiles of scrap, obtained without bills. 
• Though iron and steel attracts 18 % GST, these furnaces are suspected to have bought the bills by paying 9 % (in cash) to the two companies.