Fake GST invoice racket of Rs 106 crore unearthed in Odisha

Bhubaneswar, Jun 28 (PTI) An Odisha government agency working under the Goods and Services Tax (GST) directorate on Monday unearthed a racket that issued fake invoices to the tune of Rs 106 crore, which caused a loss of Rs 19.04 crore to the state exchequer in the form of input tax credit (ITC), an official said.

The ITC is the tax that a company pays on a purchase and that it can use to reduce its tax liability when it makes a sale.

The fraud came to light after the state's GST Enforcement Wing arrested Smruti Ranjan Sahoo, the proprietor of S R Enterprises, a non-existent company, and allegedly the mastermind of the racket.

"Sahoo, the kingpin in collusion with others, has availed bogus input tax credit (ITC) raising fake purchase invoices in the name of 14 fake business entities located at Angul, Jajpur, Rourkela, Jagatsinghpur, Bhubaneswar and Paradeep.

"He is also found to have passed bogus ITC on the strength of fake invoices to the recipients of both inside and outside the State of Odisha against the sale of goods purchased fictitiously and has defrauded the state exchequer," a statement issued by the GST directorate said.

Stating that the fake GST invoices worth Rs 106 crore have been arranged within a "very short span" of time, a senior official of the directorate said the investigation revealed that Sahoo has submitted false information regarding the location of the declared place of business and forged the rent agreement.

His firm SR Enterprises neither physically exists nor does any business and the transactions of purchase and sale were only on paper, he said adding that in order to regularise the paper transactions, he has routed the amount of purchase and sale through his bank account.

Surprisingly, scrutiny of his bank account reveals that Sahoo has shown receipt of all payment towards fictitious sale of goods, but the payment towards purchase of goods from fictitious firms is negligible, the official said.

During the investigation, it was found that Sahoo, along with some other co-accused, has collected documents such as Aadhaar cards, PAN cards, photographs, bank passbooks of unemployed people, farmers, housewives and others from various places of the state to create and operate fake firms, he said.

During interrogation, the arrested man has admitted to have colluded with others to create dummy firms for issue of fake invoices and passing of bogus ITC through them, according to the official.

The probe also revealed that on many occasions, goods weighing in tons have been transported on two-wheelers, three-wheelers and in cars.

In other cases of issuance of fake invoices, the GST Enforcement Wing has arrested 18 people this year. PTI AAM NN NN