Delhi: How the transfer of an officer uncovered a massive GST fraud involving 500 fake companies
Aug 13, 2024
Synopsis
Delhi's anti-corruption branch arrested seven people, including a suspended GST officer, for their roles in a massive GST fraud involving fake refunds of Rs 54 crore. Nearly 500 non-existent firms were found using forged invoices worth Rs 718 crore. The scheme resulted in significant losses due to unchecked approval processes and tax fraud.
The Delhi government's anti-corruption branch (ACB) has arrested seven individuals, including a suspended GST officer, three advocates, two transporters, and a proprietor of fake firms, for their alleged involvement in a GST fraud racket. The fraud involved fraudulent GST refunds that amounted to approximately Rs 54 crore, and forged invoices totaling Rs 718 crore were discovered. The operation uncovered nearly 500 non-existent firms, which appeared to be engaging in business activities solely on paper to claim the fraudulent refunds, a TOI report stated.
Officials have pointed to significant procedural lapses and malpractices by the arrested GST officer, Babita Sharma, who has since been suspended. The fraudulent refunds were reportedly approved without proper verification of input tax credit, which has resulted in a substantial loss to the government’s exchequer.
ACB Chief Joint Commissioner Madhur Verma highlighted the nature of the fraud:
“Input tax credit has been taken against fake invoices amounting to Rs 718 crore. In the case of 15 firms, there was neither Aadhaar authentication at the time of registration nor physical verification of the firm. Five firms were found registered under the same PAN/email ID/mobile number, which was used for multiple GSTIN registrations.”
Verma further explained the fraudulent activities:
“Forged expressway bills for carrying items and goods receipts were used in refund applications. Twenty-three out of 96 fake firms are being run by the same group of offenders, i.e., accused advocates using common email IDs and mobile numbers.”
The investigation also revealed the rotation of refund amounts through multiple bank accounts, benefiting the advocates and their family members. During the screening of 127 bank accounts linked directly to fake firms and their associates, around 1,000 additional bank accounts emerged.
A suspicious pattern of firm migrations triggered a full-blown probe into the potential GST scam. Babita Sharma, the GST officer in question, was transferred from Ward No. 6 to Ward No. 22 on July 26, 2021. During her tenure, she approved 53 firm migration requests within a short period, which raised suspicion.
Upon physical verification on September 23, 2021, it was found that all 53 firms were non-existent and non-functional. This led to a preliminary inquiry by Vivek Aggarwal, Additional Commissioner (Trade and Taxes), on October 5, 2021. The inquiry's findings prompted the referral of the case to the ACB on December 6, 2021.
The ACB has registered a case under the Prevention of Corruption Act and several IPC sections related to cheating, forgery, and criminal conspiracy. Other accused in the case include Raj Singh Saini, Narender Kumar Saini, Mukesh Saini, Manoj Goyal, Surjeet Singh, and Lalit Kumar, who are listed as advocates, proprietor, and transporters by profession.
[The Economic Times]
