Bengaluru, Sept 7: In a first for Karnataka, the commercial taxes department of Karnataka has apprehended two Bengaluru-based businessmen for alleged goods and services tax (GST) violations. The duo had committed serious fraud by raising fake invoices to pocket Rs 8.2 crore in the form of Input Tax Credit (ITC).
Commercial tax sleuths found the accused had availed ITC without selling any goods or services and without anyone paying GST. The arrested are Hameed Rizwan Parthipady Ismail, proprietor of ARS Enterprises in Mathikere, and Jeetendra Kantilal Gandhi, who owns Gandhi Iron and Steel Company in Kalasipalyam. The latter pretended to be the former’s customer in the fraud.
An economic offences court in Bengaluru remanded the duo in judicial custody, while the enforcement wing of the commercial tax department is conducting further investigation into the first GST-related criminal case in the state. “As we have made two arrests, it is a major development in the compliance journey of GST,” said commercial taxes commissioner MS Srikar.
The fraud came to light after the department’s data analytics software (GSTPro) threw up hints at a string of suspicious transactions involving ARS Enterprises, a firm in Chikkabanavara dealing in ferrous and non-ferrous scrap.
The department’s enforcement team led by additional commissioner Nitesh K Patil and assistant commissioner G Viswanatha arrested Ismail after physical inspection of his business area. Ismail has been accused of issuing GST invoices worth Rs 45.9 crore to his customers in the 13-month period since the launch of GST, without any sale taking place.
However, after recording the sale/purchase transactions, Ismail as well as a number of his customers claimed ITC from the department. Gandhi was found to be one such customer. He is the second person arrested in the case.
The case highlighted that data-based intelligence is key to ensuring a higher degree of compliance, the department said in a press note.
Tax evasion: Firm fined Rs 53 cr
In a separate case, tax officials have imposed a Rs 53 crore penalty on a city-based paints and decoration company for evading tax. The company, which has its registered office in Yeshwantpur and manufacturing unit in Malur industrial area, is alleged to have evaded commercial tax for months. It didn’t respond to notices issued by the department. A team of GST officials on Wednesday conducted raids on both the corporate office and the manufacturing unit. Officials said they decided to impose the penalty after verifying the documents seized from the company.
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