Income Tax Dept warns public against cash dealings of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.

Major GST Scam unearthed in Hyderabad

The Central Goods and Services Tax ( GST ) department has made four arrests in a major scam involving raising fake GST invoices and claiming Input Tax Credit (ITC) from the Government. Last year, the department had recorded around 150 cases over fake GST invoices in Hyderabad city. 

One Amit Mittal, the proprietor of Aavya Enterprises, based out of Sanga Reddy district was arrested on Thursday for filing fake invoices in tune of Rs 5.7 crore. He has been remanded for 14 days. 

This is the fourth such arrest in a span of two weeks since May 17 by the Anti Evasion wing of the Central GST Commissionerate in Telangana. 

So far, eight companies in Hyderabad have been arrested by the GST Commissionerate for issuing fake invoices under the pretext of supplying TMT steel bars and other products. The role of the ninth firm, Aavya Enterprises was revealed recently. 

An official press release issued by the Officers said that fake invoices were raised for goods with an approximate value of Rs 143 crore and a fraudulent Input Tax Credit was claimed in tune of Rs 25.74 crore by the firms. In the case of Aavya alone, it was Rs 5.76 crore. 

These companies would procure Aluminum and copper scrap from unregistered suppliers in the open market. They would generate fake invoices from other firms and take ITC based on these invoices. This would then be used by these firms to evade paying GST. 

Aavya enterprises and the other eight firms would then resell the goods to manufacturers with proper billing becoming eligible to claim ITC on the raw goods they had sourced from the unregistered supplier. 

M Srinivas, the Medchal Commissioner for Central GST Commissionerate told The Hindu that the firms had also defrauded banks by claiming ‘ineligible’ credit facilities or Letter of Credit without submitting any collateral. 

Officials with the Telangana State Commercial Tax Department work closely with their central counterparts. “This particular racket has been busted by the Central team, we on the stateside have come across 150 cases of fake invoices within Hyderabad in the last one year,” said M Sathyanarayana Reddy, Enforcement wings special commissioner, Telangana state commercial tax department. “These crimes get caught in the back end, we do a lot of data analysis and keep watch on the patterns that emerge to nab those who claim false ITCs,” he added.

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