Wednesday, 20 July 2022 | PNS | Dehradun
In a major operation which continued till late on Monday night, the CGST Uttarakhand commissionerate conducted simultaneous searches at 11 premises and detected a major syndicated fraud involving four firms registered in Delhi and seven in Uttarakhand responsible for fraudulent supplies of Rs 23 crore and ITC credit of Rs 4.2 crore. The action thwarted an attempt to take refund of such fake ITC credits.
According to official sources, based on intelligence developed in respect of a newly registered unit in Dehradun- Tech Growth Enterprises which was engaged in a fraudulent attempt to avail refund from the State exchequer, an investigation was launched by the commissionerate. During the investigation, it was found that Tech Growth Enterprises is involved in ostensible exports of software and IT solutions. For the alleged ‘exports’, inward foreign remittances have also been received as per the bank statements submitted along with refund application.
On further scrutiny and analysis done by the anti-evasion officials of the commissionerate, a wider syndicate of 11 firms spread over different States and jurisdictions was unearthed. This includes four firms in Delhi and seven in Uttarakhand with the latter having registrations mostly in Dehradun. All these eleven firms appear to be related in as much as they are a part of the same fraud unearthed by the department. On analysis of these various entities using different data analytic tools, it was found that the original supplier of this entire group of companies- Morya Enterprises based in Delhi is a supplier of garments and has made fraudulent supplies to three other units in Delhi, namely Gagan Solutions, Immaculate World Tech Solutions and JK Solutions, with all the latter three firms ostensibly supplying IT products/ services. These three firms in turn have supplied IT products and services to seven units in Uttarakhand, namely Tech Growth Enterprises, Gentia Software Solutions, Brookfield World Wide Solution, Protects World Wide Solutions, Khinda Tech Software Systems, Acorn Software Systems and Bakbone Software Systems. These units then have shown exports of such ‘IT services’ and have even got remittances in Indian banks. Tech Growth Enterprises then applied for refund of Rs 42 lakh of input taxes (GST) suffered by it on receiving of the alleged input ‘IT services’ from its suppliers on which GST was supposed to have been paid. Accordingly, to thwart such fraudulent encashment of credit of GST which was never paid in the first place further up the supply chain, simultaneous searches were conducted by the CGST Uttarakhand Commissionerate at the registered premises of all these 11 taxpayers spread across different premises in Delhi and Uttarakhand as also spread across both Central and State GST formations. During the searches, it was found that all the four units in Delhi are non- existent; one unit in Dehradun is non -existent and the remaining six units in Dehradun are rented shops with no activity recorded till now.
Further, statements of the landlords / custodians of these six properties were recorded under Section 70 of the CGST Act which reveal that the registered GSTIN entities have not conducted any business from these premises and that some person (other than the director/proprietor of the firms in question) would come periodically and pay the rent. In total, fraudulent supplies of Rs 23.4 crore has been made involving passing of Rs 4.2 crore of ineligible ITC; the directors and partners of these firms have all been summoned. Statement of the lawyer who was representing the firm Tech Growth Enterprises in connection with the refund application of Rs 42 lakh filed by this entity before the department was also recorded and his role is also being examined. Meanwhile, the commissioners of State GST offices of Uttarakhand and Delhi as also that of Delhi South CGST office have been requested for necessary investigations against the four suspected input service providers registered in Delhi and four entities in Uttarakhand registered with the state GST set up.
According to department officials, in the last financial year 2021-2022, the CGST Uttarakhand commissionerate has detected GST evasion of Rs 131.18 crore in 22 cases and has recovered GST of Rs 97.2 crore as a result of various enforcement operations conducted throughout the year, often involving multiple states and jurisdictions in collaboration with the concerned jurisdictional authorities as the fraudsters are more than often spread out over multiple states resulting in fraudulent supply chains cutting across different jurisdictions.
