This was apparently done to enable the Essel Group to avail inadmissible ITC: Finance Ministry
Central Goods and Services Tax (CGST) East Delhi Commissionerate on Friday arrested two men after unearthing a big network of fictitious firms working to generate and avail fake Input Tax Credit (ITC) of the GST.
"The network of fictitious companies was being operated by one Naresh Dhoundiyal in connivance with one Devender Kumar Goyal, who is a Charted Accountant by profession. Both are former employees of the Essel Group," read a statement by the Ministry of Finance.
"Naresh Dhoundiyal and Shri Devender Kumar Goyal hatched a deep-rooted criminal conspiracy with the intent to defraud the government exchequer and knowingly committed offences specified under sections of CGST Act, 2017, which are cognizable and non-bailable.
The investigations indicated that a layer of fictitious intermediatory companies was created to pass on bogus ITC from non-existent firms to the companies of the Essel Group without actual supply of any goods or services.
Finance Ministry also informed that this was apparently done to enable the Essel Group to avail inadmissible ITC, book expenses to evade Income Tax and inflate their turnover to push the share prices of their listed companies.
"The total fake ITC passed on by these fictitious companies is quantified to be Rs 92.18 crore. Whereas, the total fake ITC passed on by other fictitious and non-existent firms pertaining to the larger network is quantified to be more than Rs 300 crore," the ministry added.
The syndicate has thus defrauded the government exchequer of more than Rs 392 crore by issuing bogus invoices of more that Rs 3,000 crore without actual supply of any goods or services.
The arrested have been sent to judicial custody of 14 days till March 18. Further investigation is underway.