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More names emerge in input tax credit scam under probe by DGGI

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More names have emerged in the input tax credit scam under investigation in Surat in which crores of worth of input tax credit was gained by raising invoices in the name of fake companies.

The Directorate General of GST Intelligence(DGGI) has unearthed the names of Imran, Qadir, Gautam, Shankar, Siddharth, and one Pandey while investigating the case of Zaiyad Chakkiwala in connection with wrongfully claiming the input tax credit, sources said.

As to their role in the scam, the sources said Siddharth used to supply material to people under a buyback offer while Pandey helped get the goods released from the Mumbai customs house. Investigation officials believe that the six were part of a gang that orchestrated the scam.

The input tax credit scam

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.

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.

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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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