GST officers arrest two for passing bogus ITC worth Rs 392 cr to Essel Group cos

GST officers have arrested two persons for passing on bogus input tax credit (ITC) of over Rs 392 crore from non-existent firms to Essel Group companies without actual supply of any goods or services.

The officers of the Central Goods and Services Tax (CGST) Commissionerate, Delhi (East), unearthed a network of fictitious companies being operated by Naresh Dhoundiyal in connivance with Devender Kumar Goyal, who is a Chartered Accountant by profession.

“Both Naresh Dhoundiyal and Devender Kumar Goyal are 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,” the finance ministry said in a statement.

Investigations indicate that a layer of genuine looking fictitious intermediary companies was created to pass on bogus ITC from non-existent and fake firms to the companies of Essel Group 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 ministry said.

While Dhoundiyal incorporated multiple fictitious intermediary companies for Essel Group, Goyal arranged the fake invoices of various other fictitious and non-existent firms for such fictitious intermediary companies.

“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 pertaining to 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,” the ministry said.

Dhoundiyal and Goyal have been remanded to judicial custody for 14 days till March 18. Further investigation in the case is in process.

Since the inception of GST Central Tax, Delhi Zone has made 30 arrests in various cases, involving GST evasion amounting to more than Rs 4,450.86 crore.