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Karnataka SGST sleuths open their Arrest Account

Published: Sep 07, 2018

By TIOL News Service

BANGALORE, SEPT 07, 2018: THE Enforcement Wing of Commercial Taxes Department, Karnataka yesterday arrested proprietor of M/s A R S Enterprises based for issuing bogus tax invoices worth Rs 45.94 Crore thereby evading GST amounting to Rs 8.16 Crore.

As per the official Press Release, the accused, Hameed Rizvvan Parthipady Ismail had obtained registration under the GST Act, 2017 in the trade name of M/s ARS Enterprises (GSTIN: 29AB1PI7472B1ZL) in the business of trading of ferrous and non-ferrous scrap during the period of July 2017 to July 2018.

The place of business was inspected by the SGST sleuths and observed that, the taxable person has not received any goods or services and has claimed input tax without any purchases to avoid payment of tax. It also came to light that the taxable person had issued invoices for outward supplies to enable various purchasers to claim input tax credit without supply of goods or services whatsoever and thus facilitated to claim input tax credit (ITC) fraudulently. Further, it was found that the Taxable Person was guilty of an offence committed under clause (b) of Sub-section (1) of section 132 for the reason that he had issued tax invoices without supply of goods or services leading to wrongful availment or utilization of input tax credit by the purchasing dealers. This offence is punishable under clause (i) of sub-section (1) of section 132 for the reason that the amount of tax evaded exceeds Rs 5 Crore under both CGST and SGST Acts put together.

On verification of the data as depicted in the Data Analytics Software (GSTPro) of the Department, it was observed that the taxable person had issued tax invoices without supply of goods or services and indulged in issuance of bogus tax invoices facilitating the purchasing dealers to claim bogus Input Tax Credits (ITCs). As per returns uploaded by Taxable Person in GSTR-1 and CJSTR-3B filed for the periods from July 2017 to July 2018, the total value involved in the said tax invoices is Rs 45.94 Crore and corresponding output tax involved is Rs. 8.16 Crore.

The taxable person was asked to produce the documents in support of the input tax credit claimed in GSTR-3B. But the taxable person failed to produce the valid purchase invoices. Hence it was evident that he has not received any goods or services and without purchases he has claimed input tax to avoid payment of tax. It was also evident that the taxable person had issued outward invoices to his purchasers to enable them to claim input tax credit without supply of goods or services whatsoever. Thus, the taxable person has committed an offence punishable under Section 132(b) of the CGST Act, 2017 and the concurrent provision under KGST Act, 2017.