A rogue tax officer, a trio of lawyers and a few other people masterminded a fraud, swindling Rs 54 crore from the Goods and Service Tax (GST) Department in the national capital. It was exposed by the Anti-Corruption Bureau of the Delhi Government.
'The Special 7 And 500 Firms'
A GST officer, three lawyers, two transporters and the owner of a "company" were part of a plot involving 500 fake companies and fake invoices worth Rs 718 crore to claim GST refunds worth Rs 54 crore. The 500 companies only existed on paper and were purportedly involved in the import/export of medical goods to claim GST refunds.
'The Rogue Officer'
Babita Sharma, the GST Officer (GSTO), hatched a plan with 96 fake firms and approved over 400 refunds worth Rs 35.51 crore between 2021 and 2022. In the first year, only refunds worth Rs 7 lakh were approved but later the remaining were approved.
Interestingly, the refunds were approved by the GSTO after filing the applications and approval was given within three days. In 2021, Ms Sharma was transferred to Ward 22 of the GST office and surprisingly, within a few days, over 50 firms applied for migration from Ward 6 to Ward 22, and was okayed within a short period. The migration raised alarm bells and the GST Vigilance Department sent teams to the offices of these firms. It led to the unearthing of the GST fraud, which had roots in its own office.
A particular ward has jurisdiction over a specific area.
'The Modus Operandi'
The fake firms generated invoices worth Rs 718 crore, i.e. fake purchases were made and business was only on paper, the probe, which was later transferred to the ACB, found. The GSTO issued refunds without verification of invoices and Input Tax Credit (ITC).
Over 40 firms were supplying goods in the first phase but no records were available in the second phase, the probe found. In the case of 15 firms, there was neither an Aadhar Card verification nor physical verification of the firm at the time of GST registration, which as per the rules is mandatory.
Of the 53 firms that migrated to Ward 22 after Ms Babita's transfer, 48 were given a GST refund of Rs 12.32 crore. The Non-Objection Certificates or NOCs from property owners of these firms for offices were prepared between July 26, 202 and July 27. The GSTO was transferred to Ward 22 on July 26, 2021.
The investigation revealed that the GST refunds were issued in the bank accounts of three lawyers – Rajat, Mukesh and Narendra Saini and their family members, through different bank accounts. The ACB found 1,000 bank accounts directly related to the fake firms, their family members and the employees.
The trio ran 23 firms from an email ID and mobile numbers. Five firms were registered under the same PAN number and email ID to generate different GST registration numbers.
The 23 firms handled by the lawyers generated fake invoices worth Rs 173 crore. Out of these 23 fake companies, seven were involved in the supply of medical goods and had shown business of Rs 30 crore in their invoices.
One of the accused arrested is a fake firm owner, Manoj Goyal and two transporters, Surjeet Singh and Lalit Kumar. The Anti-Corruption Bureau said forged e-way bills and receipts of carrying goods were generated to get GST refunds. The transporters received money for providing such documents without giving any service.