Ahmedabad, February 24, 2017
It was an intricate web of financial transactions that seemed perfect — tax returns shown at the end of financial year for some 40 firms, regular transactions in over 120 bank accounts and even a paper trail showing transactions from one firm to another, linked with a dealer-supplier or buyer-seller relationships. There was just one problem. None of them existed physically.
CID (crime) sleuths investigating the fraud of Rs 100.29 crore by evasion of commercial tax have yet to identify the beneficiaries of the elaborate scheme. Investigators got seven day remand of the prime accused, Jignesh Mehta, on Thursday, to identify other players in the case and how the scam worked for years before anybody could notice.
"As a commercial tax consultant, Mehta understood how the system worked. He set up 'firms' on paper and linked bank accounts to them. For the accounts, he used a vast collection of identity cards belonging to milkmen, bicycle repair men, flour mill employees and so on. They were told that they could get loans at a lucrative rate and they provided their Aadhaar card, residence proof and in some cases PAN numbers," said an investigator.
Mehta and others then started using those details to open and operate bank accounts by changing the mailing address. On the basis of these accounts, he could procure a TIN for value-added tax (VAT).
Sources said Mehta was meticulous in filing returns for each fake company. "This is the flip side of the digitization. Once the firms were up and running and were showing on the commercial tax department's records, nobody bothered to check whether they existed physically. If verification had taken place earlier, the bubble could have burst immediately," said sources.
By the method, the accused misused C, F and H Forms issued by the department and showed sales of Rs 1,072.92 crore and purchases of Rs 1,034.58 crore, on which they later claimed tax rebates.
[The Times of India]