Crackdown on bogus GST claims | DGGI unearths Rs 41cr IGST evasion, nabs kingpin

The Directorate General of Goods and Services Tax Intelligence Unit (DGGI), Mumbai zone, has unearthed an Integrated Goods and Service Tax (IGST) evasion to the tune of around Rs 41 crore and arrested kingpin Tejas Desai. The latter had used 15 companies in different states to avail input credit of Rs 41 crore without supply of any good or services and claimed an IGST refund of Rs 38.55 crore as against exports, sources told Moneycontrol.

DGGI had conducted searches at the premises of Desai in September and found many bogus entities that were created to avail refunds in a fraudulent manner.

"To nab the kingpin, DGGI had conducted searches at the premises of forex dealers, commission agents and freight forwarders. In the course of its investigation, the department found that Desai was a director/promoter/operator of these companies and connived with a number of persons to utilise input tax credit of Rs 41.15 crore and further availing IGST refund of Rs 38.55 crore on the basis of bogus/fake invoices," Seema Jere Bisht, Principal Additional Director General, DGGI –MZU, who was heading the investigation, stated.

He was arrested on December 14 and produced before the Additional Chief Metropolitan Magistrate Court in Mumbai, who has remanded him to 14 days judicial custody.

Desai is habitual offender and has been arrested by the Central Excise Department, Surat in 2005 in connection with an export rebate fraud and Directorate of Revenue intelligence in 2007 for over valuation of exports.

Due to shortfall in GST revenue, the department has become extra vigilant on bogus claimants. The government also wants to maintain its monthly GST revenue target above Rs 1 lakh crore and has been looking at ways to stem any loopholes in the system.