Racket of Issuance of Fake Invoices Involving GST of Rs 22 crores Busted

[Min of Finance Press Release dated 15.11.2019]

Central GST Delhi North Commissionerate has unearthed a racket of issuance of fake invoices without actual supply of goods and services. Shri Naveen Mutreja and Shri Keshav Ram have been arrested in this matter and remanded to judicial custody for 14 days by the Chief Metropolitan Magistrate (CMM), New Delhi at Patiala House Courts. The accused were found to be operating 42 fake firms created to facilitate fraudulent Input Tax Credit (ITC), thus defrauding the Exchequer. Prima facie fraudulent ITC of about Rs 22 crores has been passed on using invoices involving an amount of Rs 150 crores.

The modus operandi of the two accused, inter alia, involved obtaining GST registration of fake firms across Delhi NCR, Haryana, Rajasthan and Uttar Pradesh using documents of unsuspecting individuals and generating good-less invoices and e-way bills of these firms from a premise in Karol Bagh, Delhi. On preliminary scrutiny it appears that there is no nexus between inward and outward supplies of the errant firms. Further, the said firms have passed on fraudulent ITC to a range of buyers who have availed the same to discharge their GST liability on outward supplies, thus defrauding the Exchequer.

Therefore, the two accused have committed offences under the provisions of Section 132(1)(b) and (c) of the CGST Act 2017, which are cognizable and non-bailable under Section 132(5) being punishable under Section 132(1)(i) of the said Act. Accordingly, Shri Naveen Mutreja and Shri Keshav Ram were arrested on 14.11.19 and have been remanded to judicial custody for 14 days on 15.11.2019 by the CMM, New Delhi at Patiala House Courts. Investigations are underway to identify the key beneficiaries of this racket and to recover GST involved.