The Delhi Central Goods and Services Tax commissionerate has unearthed a massive network of fictitious firms created allegedly by two former Essel group employees to generate and avail fake Input Tax Credit (ITC) of Goods and Services Tax. The accused have been identified as Naresh Dhoundiyal and Devender Kumar Goyal, a chartered accountant. Both were former employees of Essel Group. "Though they are presently not working with the Essel group officially, however, they are passing on inadmissible ITC to the said group," an I-T department statement said.
As per the initial probe, a layer of "genuine-looking fictitious" intermediary companies was created to pass on "bogus ITC" from non-existent and fake firms to the Essel Group companies without actual supply of any goods or services. "This was apparently done to enable Essel Group to avail inadmissible Input Tax Credit of GST, book expenses to evade Income Tax and inflate their turnover to push the share prices of their listed companies," the Income Tax Department stated.
Dhoundiyal allegedly incorporated multiple fictitious intermediary companies for Essel Group whereas Goyal arranged the fake invoices of fictitious and non-existent firms.
"The total fake Input Tax Credit passed on by such fictitious intermediary companies is quantified to be Rs 92.18 crore, whereas the total fake Input Tax Credit passed on by other fictitious and non-existent firms about the larger network is quantified to be more than Rs 300 crore. The syndicate has thus defrauded the government exchequer of more than Rs 392 crore by issuing bogus invoices of more than Rs 3,000 crore without actual supply of any goods or services, which is likely to increase as the investigation progresses," the department added.
"Vertilink Media Solutions Pvt Ltd has admitted the evasion and has voluntarily deposited Rs 2.5 crore," the department said. Dhoundiyal and Goyal have been arrested under Section 69(1) of the CGST Act, 2017, and produced before the duty magistrate on Wednesday, who remanded them to judicial custody for 14 days. Since the inception of GST Central Tax, the Delhi Zone has made 30 arrests in various cases involving GST evasion, amounting to over Rs 4,450 crore.
The GST department has launched a crackdown against fake invoicing frauds and GST evasion since November 2020. So far, the department has arrested 329 persons and filed more than 3,200 cases against 9,600 fake GSTIN entities. The authorities have recovered more than Rs 1,000 crore from fraudsters.