Frauds under GST :As there was a practice of claiming false input tax credit under the erstwhile tax regime by generating false invoices the same doing is witnessed under the GST regime. The central goods and service tax department has arrested 4 persons for indulging in fraud by claiming false input tax credit.
Conditions for availment of ITC under the Act are :
- He is in possession of a tax invoice or debit note issued by a registered supplier.
- He has received the goods/services/both.
- The tax charged has been actually paid to the government either in cash or through utilization of ITC.
- He has furnished the return under the prescribed section.
The case here involves a brain box Mr. Pankaj Bagla who was acting as a broker for generation of fake invoices for claiming input tax credit. The credit amount involves a substantial amount of money roughly around 400 crores. The amount will increase as the further interrogations will take place. CA B Singhania was also arrested as the fraud took place right under his nose.
The Kyal brothers , owners of a genuine enterprise used to purchase leather wallets in cash . Fake bills were produced for claiming input tax credit for which Mr. Bagla was a helping hand. These wallets were then exported and the tax paid on exports was claimed as refund.
The persons involved are now under judicial custody and further interrogations are being conducted.