The Central Goods and Service Tax (CGST) Commissionerate, Lucknow, busted a major network of 131 shell firms involved in bogus supplies of ₹1355 crore and passing ineligible input tax credit to recipient firms all over the country, said officials on Thursday.
The major commodities shown in these fake supplies were waste, scrap, plywood and veneer. These bogus supplies were shown in the records to pass on the benefit of ineligible input tax credit to the tune of ₹197.20 crore to recipient firms with the intention of evading payment of GST.
These fake, non-existing firms registered under GST had shown supplies of goods and services worth ₹1355.74 crore to about 1,100 recipient firms all over the country, but the supplies had not actually taken place. Most of the recipient firms were located in Uttar Pradesh, Haryana and Delhi, said Deepankar Aron, commissioner of CGST & Central Excise Commissionerate, Lucknow.
This major nexus was unearthed in 11 districts of UP as part of the special pan India drive to bust syndicates engaged in creation of fake firms to fraudulently avail GST benefits. CGST Lucknow undertook an extensive operation during May, June and July 2023, CGST officials were quoted in a press release.
They said physical verifications were conducted at the addresses of 647 firms registered under the jurisdiction of CGST, Lucknow, spanning Lucknow, Unnao, Hardoi, Shahjahanpur, Sitapur, Lakhimpur, Barabanki, Gonda, Balrampur, Bahraich and Shravasti.
“During this drive, 131 firms were found to be ‘ghost’ firms or non-existent firms that had taken GST registrations on fictitious names and used forged documents. Different tricks were used to get these shell firms registered -some had fraudulently taken GST registration using PAN of some other persons while some had forged rent agreements or electricity bills and mentioned addresses that were non-existent,” explained a CGST official.
He said tax authorities of all such recipient firms that received input tax credit from these non-existing fake firms had been alerted for recovery of such input tax credit. The GST registrations of these fake, non-existing firms were suspended/cancelled as well as the input tax credit (ITC) to the tune of ₹21.60 crore available in their credit ledgers was blocked to prevent its misuse.
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