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Surat input tax credit scam: 7 new names of traders emerge

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The name of seven more traders has emerged in connection with a scam in Surat in which crores of the worth of input tax credit was gained by raising invoices in the name of fake companies.

The Directorate General of GST Intelligence(DGGI) have unearthed the new names while investigating the case of Zaiyad Chakkiwala in connection with wrongfully claiming the input tax credit.

The DGGI was investigating Vedan Impex Ltd’s owner Mohammed Zaiyad Chakkiwala who raised fake bills in the name of non-existent companies to claim an input tax credit worth crores of rupees.

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The investigators have found several incriminating documents and are verifying the same. It is believed that Chakkiwala used his company’s registration to falsely claim Rs6.54 crore of an input tax credit.

The department after arresting him had sought his custody for further investigation but the court had sent him to judicial custody.

The tax credit scam

Investigations have revealed that Chakkiwala through Vedan Impex set up 73 fake companies and is believed to have cheated the exchequer of Rs100 crore in tax.

As of now, investigations have exposed 13 bogus companies where Chakkiwala showed the supply of products which never happened. He raised a bill for the same and wrongfully gained Rs6.54 of an input tax credit.

During interrogation, Chakkiwala has revealed the names of seven more traders who were hand-in-glove with him in perpetrating the fraud. The department is likely to send a summons to the seven traders in the coming days. The interrogation of the traders is likely to expose more players in the scam.

Input tax credit refers to a policy where a manufacturer can reduce the tax on output by subtracting the tax already paid on inputs. For example a trader manufactures a chair and the output tax on it is Rs200. The input tax (tax he paid while purchasing raw material, nails etc) is Rs150. He can then subtract the input tax (Rs150) already paid from the output tax (Rs200) that is due. Thus he will have to pay a tax of just Rs50.

 

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