Arrest of the Proprietor of a Trading Firm in a case of fake transactions

Arrest of the Proprietor of a Trading Firm in a case of fake transactions of over Rs. 35 Crore and availment of Input Tax Credit of Rs. 3.51 Crore on fake invoices

On the basis of specific information regarding availment of ITC on fake invoices, searches were conducted on 19.11.2020 by the officers of DGGI, Nagpur Zonal Unit at the premises of a Nagpur based trading firm dealing in Paint, Cement and Iron & Steel products.

The searches revealed that the trading firm was non-existent and a Printing Press was operating from the declared premises whose owner was not aware of any entity by the name and style of the said trading firm. The Proprietor of the trading firm was eventually traced and apprehended. In the initial stages of interrogation, the Proprietor denied having any relation with the trading firm. Therefore, a detailed examination of the relevant documents was undertaken and the following details were found to tally, which conclusively proved that the apprehended person was actually the Proprietor of the fake trading firm:

(i). Photograph of the Proprietor uploaded on GSTN

(ii).   Aadhaar Number of the Proprietor declared on GSTN

(iii).   PAN of the Proprietor declared on GSTN

(iv).   Residential address of the Proprietor declared on GSTN

The total fraudulent ITC availed and passed on by this trading firm was computed as Rs. 3.51 Crore out of which ITC of Rs. 2.75 Crore, on further detailed examination, was found to have been availed on the strength of fake invoices issued by non-existent firms based in Chattisgarh.

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