GST dept arrests man for ₹8.43 crore tax evasion

For the first time, the Uttar Pradesh Goods and Services (GST) department has arrested a person for an alleged GST fraud in Noida. The suspect allegedly ran a fake company related to iron scrapping and had obtained a GST number only to claim input tax credit (ITC) fraudulently by issuing receipts.

According to officials, the firm RK Enterprises was first investigated by the GST team in April 2022. The team was informed that the company had filed for a licence for the sale and purchase of iron scrap materials in February 2022.

“However, during the investigation we found that the company did not exist in any legal records. It only took invoices and passed it on to claim ITC without doing any business. We found that the company was involved in tax evasion to the tune of ₹8.43 crore in just two months. An FIR was filed in Phase 2 police station in this regard on April 29, 2022 and the company’s licence was cancelled,” said Raja Ram Gupta, special investigation branch (grade 2), UP-GST department.

Input tax credit means claiming the credit of the GST paid on purchase of goods and services that are used for the furtherance of business by sales. This can be used to reduce the GST burden by businesses, officials added.

Officials said that the company’s owner, Ravidas, a native of Haryana, was on the run. He was arrested on January 3 by a police and GST team from Ambala. He was produced before a magistrate and sent to judicial custody.

According to Aditi Singh, additional commissioner, (commercial tax) Gautam Budh Nagar, this is the first case of tax evasion in the district where the suspect has been sent to jail. “This will serve as an example for others who commit financial frauds”, she said.

Officials said that in most cases, usually a penalty is imposed for such evasions.

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