GST sleuths arrest three for fraud

Stepping up heat on tax offenders, officials of the Directorate General of GST Intelligence (DGGI) have arrested three industry executives for allegedly running a racket of issuing bogus invoices without actual supply of goods.

Two of them are directors of the companies that issued the invoices and were on the run while the third is a director of an export company, said an official statement from the finance ministry. The exporter allegedly claimed tax refunds on the basis of bogus invoices issued by these firms.

The case highlights the fact that tax authorities have stepped up enforcement activities after taking a lenient approach during the last few months on account of the coronavirus pandemic. Officials are of the view that instances of fraud hamper their trust in tax payers and often lead to tighter rules which raises the compliance burden for all. Also, tax evasion reduces the government’s ability to reduce tax rates.

All the three persons have been arrested by DGGI for committing offences under the provisions of the CGST Act and are remanded for judicial custody by the magistrate even as investigations progress, said the statement.

Some exporters are under the radar of GST authorities for abusing the tax system. So far, 1,474 exporters who have fraudulently claimed tax refunds are found to be untraceable. Tax refund is suspended in all these cases, a government official said on condition of anonymity.