134 booked in Rs 100-cr fake GST billing scam

BOX

Modus operandi

*The companies were buying GST bills from retailers of paints, hardware goods and cement amongst others at just 2-7 per cent of the GST levied on these (the GST levy is 5-28 per cent on the items).

*They were then selling these bills to other large manufacturers and exporters.

*They, in turn, were taking input tax credit (ITC) by submitting these bills when actually no sale of goods was taking place by them.

Ruchika M Khanna

Tribune News Service

Chandigarh, March 1

In the first major action against the "organised gang" involved in the Rs 100 crore fake GST billing scam, the Punjab Excise and Taxation Department has got police complaints registered against 134 persons associated with 70 companies/ firms in the state.

Those booked in the fake billing scam are mostly registered as either iron and steel or yarn traders and manufacturers. But investigation, so far, has shown that most of these companies did not exist at the registered address.

These companies were buying GST bills from retailers of paints, hardware goods and cement amongst others at just 2-7 per cent of the GST levied on these (the GST levy is 5-28 per cent on the items).

They were then selling these bills to other large manufacturers and exporters, who in turn were taking input tax credit (ITC) by submitting these bills when actually no sale of goods was taking place by them.

As soon as the case was registered in Ludhiana yesterday, joint teams of Excise and Police started conducting raids against the companies and their functionaries.

Even today, raids were conducted on two big yarn manufacturers in Ludhiana, informed sources.

While the GST on cotton yarn is 5 per cent and on polyester yarn is 12 per cent, most of the trade in yarn takes place without any bills being cut.

The bills that the polyester yarn manufacturers cut are sold to exporters at just 4-5 per cent of the GST rate of 12 per cent, so the exporters claim ITC on these.

Other than conducting raids on these people, the Excise and Taxation Department has also moved the case for cancelling the GST registration of these 70 companies.

Vivek Pratap Singh, Excise and Taxation Commissioner, Punjab, told The Tribune that it was physical verification of some of these companies as well as data mining by the department that helped unearth the multi-crore scandal. He maintains that this is just the tip of the iceberg.

Interestingly, official sources say that most of these companies against which the FIR has been registered had even filed their GST returns.

Since the companies or traders are required to mention the details of their bank accounts while registering under GST, their accounts remained dormant.

They used other bank accounts (not registered) to get the credit of the amount mentioned in the bills from the manufacturers/exporters through RTGS and would then withdraw the money and refund them the amount.

"Investigations have shown cash withdrawals from these accounts worth several crores,” said Vivek Pratap Singh.