• Notification Date: 06-03-2023
  • Notification No: N/A

Uttarakhand GST Dept busts Fraud Syndicate involved in Tax Fraud

Using digital tracking and electronic surveillance, Uttarakhand tax authorities have busted a group of traders who would float fake firms to give a legal cover to their illegal trade of timber and its products and evade GST worth crores of rupees, officials said on Sunday. The Uttarakhand GST department launched an expansive search and seizure operation named 'Operation D Day-Rising Woods' in order to unearth the racket in Jaspur area of Udham Singh Nagar district, they said. 

Udham Singh Nagar is considered one of the biggest timber markets and timber and its products are supplied across the country from here. 
The investigators suspect the involvement of people from other states such as Uttar Pradesh, Haryana, Delhi, Bihar and Rajasthan. 

The operation involved 27 teams with more than 300 tax and forensic officials and financial technology experts and they raided 27 commercial establishments and residences of transporters, advocates and chartered accountants. 
The investigators, who have been tracking these illegal networks for the past nine months, found multiple firms in the name of a single person with the sole purpose of defrauding the tax authorities. 
They believe the accused had worked out a plan to cheat the GST regime, since its implementation in 2017, by providing legal cover to the fake companies to show procurement of raw materials from the black market. 
The investigators suspect the involvement of bank officials in helping them with opening accounts without a proper KYC process. The network involved 25 to 30 key people working in collusion with each other, officials said. 

Speaking to PTI, Ranveer Singh, a joint commissioner of the Special Investigation Bureau, said, "The modus operandi was first to float fake firms which worked on paper only. Companies dealing in timber were sourcing raw materials from the grey market and using these fake firms as their genuine suppliers by getting purchase orders and bills from them. They paid input tax credits to these fake firms which caused a huge loss to the government." 
"During the initial investigation, it was found that a syndicate was involved in creating fake firms by misusing the documents of others and allegedly causing huge loss of revenue," Singh said. 
He added that the nexus was involved in passing on fake input tax credits by generating fake invoices without the actual supply of goods to Bijnor, Rampur, Moradabad, Saharanpur of Uttar Pradesh and Yamunanagar in Haryana. 
Prima facie, the turnover is estimated to be over Rs 100 crore with evasion of over Rs 18 crore of tax. The search and seizure operation started at 11 am on March 4 and continued till late at night. Teams have seized substantial amounts of documents, electronic devices like mobile phones, laptops, tablets, stamps, bill books, debit and credit cards, chequebooks, and signed blank cheques, said Rajneesh Yashwasthi, deputy commissioner, Special Investigation Bureau. 
"We sought help from forensic experts to verify the data seized from the electronic devices. Rs 7 lakh in cash was also seized during the operation. Firms and unregistered places of business that were found locked have been sealed with the help of the district administration," he added. 
The operation was launched following directions from Commissioner Tax, Uttarakhand, Ahmed Iqubal and led on the ground by Additional Commissioner, Kumaon, B S Nagnyal, officials said.