Mumbai, May 19, 2018

Sources said investigation was underway and the fraud amount was expected to go up to Rs 2 billion

The Directorate General of Goods and Services Tax Intelligence (DGGSTI), an intelligence department under the Central Board of Indirect Taxes and Customs (CBITC), on Saturday arrested two businessmen for allegedly availing illegitimate tax credits of Rs 1.28 billion, under the Goods and Services Tax (GST) provisions.
 
According to sources, the intelligence team at Mumbai has arrested two people — Amit Upadhyay, director at Horizon Outsource Solutions, (a business process outsourcing company), and Asad Anwar Sayed, director of Best Computer Solutions, for availing ineligible credit of Rs 480 million and Rs 800 million, respectively.  “Both (companies) were exchanging invoices for so-called sale and purchase. They were allegedly indulging in only paper/invoice movement and no actual goods changed hands,” an official in the know said. The modus operandi was adopted with malafide intention to defraud the government.

Both accused have been remanded to judicial custody till June 2.

Sources said investigation was underway and the fraud amount was expected to go up to Rs 2 billion.

The probe agency said that Upadhyay has been also charged for service tax evasion of Rs 460 million for the period between April 2016 and June 2017.

This is the first big case registered under the GST laws, a source claimed. According to him, the intelligence wing has identified at least a dozen companies where they found certain lapses in their GST filing. This could lead to more action in future, he added.

Under the GST law, the power to arrest can be exercised where there is deliberate fraud of sizeable magnitude with intent to evade tax.

The provisions in the law are meant to serve as a deterrent to unscrupulous elements in trade who may try to defraud the system. There are sufficient checks built into the law to ensure that inadvertent or procedural lapses do not attract severe punitive measures, official cited above explained.

In March, the tax authorities had arrested directors of two firms under the same provisions. However the amount of fraud was about Rs 70 million.

[The Business Standard]