The Central Goods and Service Tax (GST) Commissionerate Officials of Coimbatore Region have detected Rs.9.7 crore worth tax evasion and arrested the proprietor in this regard.
The officials initiated the investigation by searches and by giving summon proceedings against M/s.MSK Associated Traders, the issuer of the fake invoices. The officials found that the unit was into invoice trading by issuing invoices without the supply of goods to various taxpayers through intra-state and inter-state trade. The invoices were mostly issued to scrap dealers or traders.
The tax amount in the fake invoice was availed of as Input Tax Credit (ITC) by the traders who received the fake invoices. The recipients of these fake invoices would pay commission without any actual receipt of goods. The invoices were used further for bill trading or tax payment.
M.Sampath Kumar, proprietor of M/s.MSK Associated Traders admitted to the GST office and was remanded in judicial custody on 29th October 2020. The approximate tax evasion involved is Rs.9.7 crore. Since the tax evasion involved was more than five crore, it was a non-bailable office, and the proprietor was arrested under the GST Act. The press release stated that further investigation against connected scrap dealers and end-users, who received invoices without actual supply, is under progress.
Nowadays, the government is using data analytics to detect ITC frauds. For example, the GST officials are using technology to find out cases, where a high volume of invoices was raised for sale of goods, but no e-way bills were generated for the same. On the other hand, the government is continuously striving to curb the alleged practices under GST by taking various measures, including mandatory Aadhaar authentication for GST registration.
The government may soon take a decision to extend the applicability of e-invoicing to more taxpayers, which can make the tax system more transparent and can provide real-time information to the department about invoices issued by taxpayers.
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DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.