An operator working out of a single room on Gill Road in Ludhiana is suspected to have supplied fake GST bills worth Rs 100 crore to at least 100 companies in the largest trading city of Punjab, that is fast turning into a hub of tax fraud.
The trading firm issued bills for the huge sum despite seeming to have made only negligible purchases. Looking at the inexplicable figures, the Punjab Excise and Taxation Department has initiated an investigation into what it suspects to be a shell company floated to get input tax credit (ITC) by selling fake Goods and Services Tax (GST) bills.
Department officials said the company, registered as an iron and steel trader, housed in a shop near Janta Nagar Chowk, is suspected to have sold the fake bills to companies in Ludhiana, which in turn used the bills to claim input tax credit from the Government of India.
“Based on preliminary investigation of the records and GST returns filed by the company, we have issued notices to over 70 companies to which these bills had been issued,” Vijay Garg, Assistant Excise and Tax Commissioner, said.
Sources in the trade, however, believe the firm may have sold fake bills to almost 200 companies.
The owner of the suspect company, when contacted by The Tribune, denied it was a shell company, and insisted his business was legitimate and he was into trading of iron. He alleged he was being framed by the excise officials.
However, official sources said the company had made “negligible purchases” of hardware and certain electrical goods. There was a mismatch of purchase compared to the sales shown. A senior excise official said they suspected the company was selling bills of any item demanded by the “clients”, and not just iron.
Badish Jindal, president of the Punjab Small Industries Associations, when contacted, said Ludhiana was fast becoming a hub of shell companies floated to sell fake GST bills. “We have requested taxation authorities to start online monitoring of all companies with a turnover of over Rs 1 crore to spot any mismatch in purchase and sale. Shell companies show very high sales, which is a sure giveaway.”
This is the second major GST bill scam unearthed in Ludhiana in a week. A few days ago, Central Goods and Services Tax authorities had uncovered five textile firms (each with an annual turnover of over Rs 1,000 crore) in Ludhiana buying cotton from three shell companies based in Hisar.
Authorities in Ludhiana have been asked to cancel the ITC claims worth crores filed by the five companies. The spinning mills reportedly knew they were purchasing cotton from shell companies, and were thus buying it at very low rates. From the commission agent who purchased cotton from farmers, to the cotton ginner and thereafter the Hisar-based shell company, no one was paying any tax, but ITC was being claimed by the Ludhiana mills.
Source: The Tribune
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