The Enforcement Directorate (ED) on Friday said its preliminary probe into a multi-crore pan-India alleged fake input tax credit (ITC) fraud has found that "big MNCs" were benefiting from these illegal transactions.
The Itanagar (Arunachal Pradesh) office of the federal probe agency carried out searches in this case on Thursday and covered about 10 premises in the northeastern state apart from Delhi, Haryana, Tamil Nadu and Telangana.
The raids were undertaken in connection with a multi-crore fake ITC fraud following registration of a case under the Prevention of Money Laundering Act (PMLA), it said in a statement.
ITC is a legal mechanism in the Goods and Services Tax system that allows business entities to reduce their tax liability by claiming credits on GST paid for business-related purchases.
The case stems from a complaint against a company named Amit Traders, located in Assam's Guwahati, the agency said.
The company was found to be "non-existent" at its declared address, it claimed.
The probe found that the firm had "fraudulently" shown purchases, passed on "fake" ITC and was linked to another company named Shree Ram Enterprises, which itself availed "fake" ITC of about Rs 116 crore on bogus invoices worth nearly Rs 700 crore, according to the ED.
"The searches resulted in freezing of bank balances, seizure of immovable property documents and recovery of incriminating records, exposing systematic misuse of the GST framework through bogus invoicing, fake e-way bills, and layered fund transfers.
"Primary investigation reveals that fake ITC has been passed to big MNCs for which a detailed investigation is going on," the ED said.
It claimed "significant" frauds came to light during the searches.
In Arunachal Pradesh, it said, the proprietors of Rainbow Enterprises and A K Enterprises "admitted" to availing fake ITC of over Rs 2 crore each without any actual supply or movement of goods.
Another entity, Tanor Engineering, was found to have "fraudulently" obtained fake ITC of Rs 4 crore.
In Hyderabad, a company named Vinardh Automobiles "admitted" to projecting a "fake" turnover of Rs 110 crore during financial years 2022-23 and 2023-24, "fabricating" records of vehicle manufacture and sales through bogus invoices and fraudulently claimed GST refunds which were siphoned off and shared among promoters, suppliers and professional facilitators, with fake e-way bills and "kickbacks" to officials.
In Haryana, according to the ED, two firms named Jai Shree Balaji Traders and Jai Shree Balaji Trading Co. declared "fictitious" turnovers of Rs 87 crore and Rs 62 crore respectively, and passed on fraudulent ITC to "leading" multinational companies, highlighting the scale of "misuse" of the GST mechanism.
In Delhi, Prisha Exim admitted to a reported turnover of Rs 200 crore in recent years, with partners claiming little knowledge of transactions carried out in its name, indicating the use of "dummy" entities, the agency alleged.
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