Hyderabad: The Directorate General of GST Intelligence (DGGI), Vijayawada regional unit, has arrested a Hyderabad resident for allegedly masterminding a fake input tax credit (ITC) racket involving transactions worth about ₹264.8 crore through 92 fictitious firms that had no actual supply of goods or services.
Dhantla Aadi Reddy, alias Anji Reddy, 36, a resident of LB Nagar in Rangareddy district, Telangana, was arrested in Andhra Pradesh and remanded to 14 days’ judicial custody by an economic offences court in Vizag on Friday.
DGGI alleges syndicate operated through 92 fictitious firms
According to investigators, Aadi Reddy prima facie committed offences punishable under the provisions of the Central Goods and Services Tax (CGST) Act, 2017, by orchestrating and operating a large-scale fake ITC racket through firms floated in the names of unrelated individuals and dummy persons.
The DGGI said the investigation, including statements recorded under Section 70 of the CGST Act, documentary and electronic evidence, GST data analysis, banking records and field verification, established that Aadi Reddy was the ‘mastermind, controller and principal operator’ of the syndicate.
Investigators alleged that fraudulent availment of ITC amounting to about ₹264.8 crore and passing of ITC worth about ₹260.5 crore was carried out without any actual supply of goods or services.
Dummy proprietors, fake premises used for GST registrations
Statements of several individuals allegedly indicated that Aadi Reddy controlled the syndicate by arranging dummy proprietors, procuring Aadhaar and PAN credentials, arranging fake premises and fabricated rental agreements for GST registration, and opening and operating bank accounts.
The DGGI further alleged that fake invoices and e-way bills were generated, and GST compliances were managed through associates linked to the network.
Field verification by investigators reportedly found that several firms did not exist at their declared places of business and were set up solely for fraudulent availment and passing of ITC through fake invoices without any movement or supply of goods.
Statements of multiple dummy proprietors, according to investigators, also indicated that their credentials were used to operate the fake ITC racket.
Sudhakar Reddy Udumula is the Editor (Investigation) at the Times...
Read MoreSudhakar Reddy Udumula is the Editor (Investigation) at the Times of India, Hyderabad. Following the trail of migration and drought across the rustic landscape of Andhra Pradesh and Telangana, Sudhakar reported extensively on government apathy, divisive politics, systemic gender discrimination, agrarian crisis and the will to survive great odds. His curiosity for peeking behind the curtain triumphed over the criminal agenda of many scamsters in the highest political and corporate circles, making way for breaking stories such as Panama Papers Scam, Telgi Stamp Paper Scam, and many others. His versatility in reporting extended to red corridors of left-wing extremism where the lives of security forces and the locals in Maoist-affected areas were key points of investigation. His knack for detail provided crucial evidence of involvement from overseas in terrorist bombings in Hyderabad.
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