Nagpur: With searches carried out in different parts of the country, the directorate general of GST intelligence (DGGSTI) has unearthed cases of fake invoices worth over Rs 10,000 crore in the current fiscal.
The main purpose of the DGGSTI raids was to probe fraudulent claims of input tax credit (ITC), leading to GST evasion. However, tax sleuths have also found that in 35% of the cases, fakes invoices were issued to fudge up the turnover with no GST evasion. This has helped many firms to avail bank loans for which they may not have been eligible in the normal course given their actual financials.
In a sizeable number of invoices, no ITC was availed through the fake invoices but it either led to avoiding income tax on the basis of recording fraudulent purchases in the books or at the other end it helped in bloating the turnover. Fakes invoices were used as a mode to route unaccounted funds too.
The DGGSTI is now taking up the job to sensitize the income tax department and even banks about such cases. There have been cases where firms with poor financials have been able to get huge loans on the basis of fake entries and have later turned NPAs, said A K Pandey, special secretary to the ministry of finance and member of Central Board of Indirect Tax and Customs (CBIC). He was in the city for an official visit.
He said a system of directly issuing invoices through the GSTnetwork (GSTN) is being worked out too. There are chances that it may be implemented in a few months as the fine tuning of the plan is under way.
With this, the sale and purchase invoices of a business having a turnover above a certain limit may have to be directly generated through the system. This will ensure easier matching of the purchases and sales of the opposite parties, he said.
Huge mismatches have also been found in the GST liability calculated by an assessee in the GSTR1 returns and the amount paid through the GSTR3B format.
GSTR 1 is a record of sales and GSTR3B is a summary return on the basis of which a final liability is discharged. At times, low sales, compared to that mentioned in GSTR1, is shown in GSTR3B by the same assessee.
Cases of mismatch over Rs 40 crore may be handed over to the DGGSTI which is a specialized investigation wing whose officers have all India jurisdiction. The rest of the cases will be taken up by the respective commissionerates, he said.
ANATOMY OF SCAMS
Fake invoices used for money-laundering and increasing purchases too
Firms availed loans on the basis of fudged up turnover through fake invoices.
Banks and income tax to be sensitized on the cases
Plant to have system generated invoices
Source: Economic Times