In a significant crackdown on tax evasion, officers from the Central Goods and Services Tax (CGST) department have uncovered a fraudulent input tax credit (ITC) racket worth Rs 23.5 crore. The scam was linked to a Bulandshahr-based scrap trader, M/s New Global Scrap Traders, which allegedly used fake invoices and non-existent firms to claim and pass on ITC. The searches were conducted at the firm’s premises in Sikandrabad and eight other locations in western Uttar Pradesh, which were registered as business addresses of suppliers associated with the firm.
However, all the addresses were found to be fictitious, raising red flags and indicating a systematic scam. The firm had claimed and passed on ITC without any actual movement of goods between 2021-22 and 2022-23. ITC is a credit that companies can claim from the government for having already paid Goods and Services Tax (GST) while purchasing items or services for their business. The firm’s proprietor, Azaharuddin, confessed during interrogation that he passed on ITC solely by exchanging invoices with bogus entities.
The scheme relied on generating fake invoices to illegally claim tax credits, which were then passed on to other firms, causing significant losses to the government. The CGST officers acted on specific intelligence inputs to conduct the searches and uncover the scam. The use of fake invoices and non-existent firms to claim ITC is a serious offense, and the government has been cracking down on such tax evasion schemes.
The uncovering of this scam highlights the importance of monitoring and verifying the authenticity of invoices and businesses to prevent tax evasion. The government has been taking steps to prevent such scams, including implementing measures to track and verify invoices and businesses. The CGST department’s crackdown on tax evasion is expected to continue, and more such scams are likely to be uncovered in the future. The Rs 23.5 crore scam is a significant amount, and the government will likely take action to recover the lost revenue and prevent such scams from occurring in the future.