Guwahati, July 5/–/ The Bureau of Investigation of Economic Offences (BIEO) has arrested one of the masterminds in a GST fraud case who was allegedly involved in the sale of fake invoices to various business establishments in Arunachal Pradesh in the name of two “non-existent enterprises” only to claim input tax credit for pecuniary gains.
Input tax credit or ITC enables businesses to reduce the tax liability as it makes a sale by claiming the credit depending on how much GST was paid on the business’ purchases.
According to official sources, Atish Kumar Tiwari (21), who hails from Saidpura village in Siwan district of Bihar, having a business establishment in Arunachal Pradesh, was arrested on Tuesday in connection with a case (number 14/2023) registered at BIEO police station.
Earlier, Tiwari along with Vivek Gupta, another trader having business enterprises in Arunachal Pradesh, was thoroughly interrogated by a special team and the investigations substantiated that the two persons were the masterminds behind the sale of fake invoices in the name of the non-existent entities – M/s Amit Traders and M/s Deepak Enterprises – without actual movement of goods to various business establishments at Itanagar, Naharlagun and other parts of Arunachal Pradesh, only to claim input tax credit.
Notably, two separate cases were registered last month, based on the complaints filed by assistant commissioners of state tax in Guwahati.
In both the cases, the trade engagements of the firms were found to be linked with various business entities of Arunachal Pradesh. Subsequently, in a bid to trace the key suspects, a special investigation team was constituted. The team had, during a week, visited as many as 30 business premises located at Itanagar, Nirjuli, Naharlagun, Ziro and Doimukh among other places of Arunachal Pradesh.
The investigation initiated by the Economic Intelligence Unit, Assam, zeroed in on M/s Amit Traders and its alleged purchase of goods from M/s Shree Ram Enterprise of Arunachal Pradesh on March 31, 2023, amounting to Rs 32.35 crore. Shree Ram Enterprise had wrongfully claimed input tax credit(ITC) of Rs 116 crore, out of which Rs 5.91 crore was passed on to M/s Amit Traders.
The investigation team found that Amit Traders, having registered address as OYO Hotel, Athgaon, Subhas Road, Guwahati, was a non-existent dealer, which had furnished fabricated documents during GST registration.
On the other hand, M/s Deepak Enterprise, operating with a fake address, was found to be engaged in the purchase of goods from multiple traders, including M/s Shree Ram Enterprise, amounting Rs 100.27 crore. One of the suppliers, M/s Shree Ram Enterprise, claimed ITC of Rs 116 crore, of which Rs 16.80 crore was passed on to M/s Deepak Enterprise.
During inquiry by the Economic Intelligence Unit, Assam, it was found that M/s Deepak Enterprise had fraudulently registered the entity by submitting fabricated documents.
“Upon thorough investigation, it was established that both M/s Amit Traders and M/s Deepak Enterprise were non-existent dealers, and the accused masterminds, Tiwari and Gupta, had created the firms to use them as a platform to generate fake invoices and the modus operandi was to show purchase of goods from those business establishments only on paper, and fraudulently take input out of the purchase to claim input tax credit (ITC), thereby causing loss to the government exchequer,” an official statement said.