BENGALURU: In the first ever arrests in Karnataka for alleged Goods And Services Tax (GST) violations, the commercial taxes department has apprehended two Bengaluru-based businessmen on charges of committing serious fraud by raising fake invoices to pocket Rs 8.16 crore in the form of Input Tax Credit (ITC).
During the probe, the commercial tax sleuths found that the accused had availed ITC without selling any goods or services and without anyone paying the GST.
The arrested persons have been identified as Hameed Rizwan Parthipady Ismail, proprietor of ARS Enterprises in Mathikere, and Jeetendra Kantilal Gandhi, who owns Ganndhi Iron and steel Company in Kalasipalyam. The latter feigned to be former’s customer in the fraud.
An economic offences court in Bengaluru remanded the duo in judicial custody, while the enforcement wing of the commercial tax department is carrying out further investigation. The criminal case in the incident is the first related to GST in the state.
“As we have made two arrests, the first of its kind, it is a major development in the compliance journey of GST,” said commercial taxes commissioner MS Srikar.
The fraud came to light after the department’s data analytics software (GSTPro) threw up hints at a string of suspicious transactions involving ARS Enterprises, a business in Chikkabanavara dealing in ferrous and non-ferrous scrap.
The department’s enforcement team led by additional commissioner Nitesh K Patil and assistant commissioner G Viswanatha arrested Ismail after physical inspection of his business area. Ismail has been accused of issuing GST invoices worth Rs 45.94 crore to his customers, in the 13-month period since the launch of GST, without any sale taking place.
However, after recording the sale/purchase transactions, Ismail as well as a number of his customers claimed ITC from the department. Gandhi was found to be one such customer. He is the second person arrested in the case.
The case highlighted the data-based intelligence is key to ensuring higher degree of compliance, the department said in a press note.
In a separate case, the tax officials have imposed Rs 53 crore penalty on a city-based paints and decoration company for evading tax.
The company, which has its registered office in Yeshwantpur and manufacturing unit in Malur industrial area, is alleged to have evaded commercial tax for months. It did not respond to the notices issued by the department. A team of GST officials led by a joint commissioner on Wednesday conducted raids on both the corporate office and the manufacturing unit. The officials said they decided to impose penalty after verifying the documents seized from the company.
Source : https://timesofindia.indiatimes.com/city/bengaluru/first-criminal-case-registered-under-gst-in-karnataka-two-held/articleshow/65710952.cms