Tax officials overseeing India’s Goods and Services Tax (GST) have unearthed fake invoices worth around US$194 million that were used to perpetrate an alleged tax fraud worth the equivalent of around US$37 million.

The fake invoices were raised by a group of eight companies trading in iron and steel products.

Group transactions

The tax officials allege the companies generated fake invoices without actually delivering the goods stated on the invoices. Products specified included steel bars and flat steel.

The firms were then passing on input tax credits to other companies in the same group.

Fake invoices

The value of the fake invoices raised by the group was around US$194 million, which generated input tax credits worth around US$37 million.

Several of the companies and individuals allegedly involved in this trade-based tax fraud operate from the same address and have directors, partners or owners in common.

Other allegations

Investigators allege the companies also indulged in circular fake trading to inflate their turnover.

This in turn enabled the companies to defraud banks by fraudulently obtaining credit facilities or letters of credit without any real collateral, according to GST officials.

Categories: Trade Based Financial crimes News