The Pune zonal unit of Directorate General of GST Intelligence (DGGI) arrested Deven Mehta, the promoter and chief executive officer (CEO) of Pune-based M/s Smart Card IT Solutions Ltd, for cheating the government over Rs 45 crore by generating fake invoices without supply of goods and services.
DGGI officials told the court that Mehta is an important cog in the conspiracy aimed at duping the exchequer by creating a complex web of transactions amongst inter-connected as well as unrelated companies engaged in fraudulent issuance of tax invoices.
Smart Card IT Solutions (SCIT) is involved in manufacturing banking IDs and telecom cards. The company is located at Sanaswadi on Pune Ahmednagar road. GST intelligence officers received a tip-off that the company is engaged in the activity of issuance and receiving fake invoices without supplying goods and services. The team, headed by senior intelligence officer Ajit Kumar Karthikeyan, conducted the investigation.
It was revealed that the company has received fake invoices from various companies based in Mumbai without receipt of material and made false entries as gate registers. It was also found that the company made false goods received notes (GRNs) to show as if material valued at Rs 300 crore was received to enable them to avail input tax credit of around Rs 45 crore. Surprisingly, in order to complete the circle, SCIT also issued fake invoices showing similar amounts to other companies. The senior manager (accounts) of SCIT has also admitted in his statement the company had issued and received fake invoices without supply or receipt of material and that two chartered accountants (CAs) based in Mumbai had facilitated SCIT in issuing and receiving the fake invoices.
Karthikeyan, in his investigation report, said, “Investigations conducted at the end of seven companies and two CAs have confirmed that these companies had issued fake invoices at the directions of Mehta. The promoter of the first four companies —Prakash Bihani (CA) — in his statement admitted that these companies had issued fake invoices on the directions of Mehta and that his other group companies have also received fake invoices from SCIT. On the basis of the fake invoices issued by SCIT, these companies have further issued fake invoices to other companies in Maharashtra and Gujarat. Similarly, the other CA, Ankur Dargar, has admitted that three companies of the seven had issued fake invoices to SCIT. The officials of SCIT have also admitted that the company has issued fake invoices without supply of goods to various entities controlled by the aforesaid two chartered accountants. On the basis of fake invoices, Mehta has availed inadmissible input tax credit of Rs 45,78,03,165 on fake invoices procured without receipt of material. The company imported duty free capital goods, under the Export Promotion Capital Goods (EPCG) and have availed benefit of customs duty of Rs 12 crore. To complete its stipulated export obligation in EPCG licences, Mehta exported substandard goods and scrap instead of genuine export goods.”
Mehta was produced before the court of judicial magistrate first class on Friday. Special public prosecutor Shekhar Tonpe argued, “The accused defrauded the exchequer to the tune of Rs 45,78,03,165 on taxable value of Rs 254,33,50,928. Due to the noncooperative attitude of the accused during investigation, certain evidences are yet to be collected and recipients of such invoices who have availed ITC without receipts of goods and services are to be examined. Further, the full extent of the fraud committed by the respondent is yet to be ascertained and measures for recovery of government revenue are to be initiated. Similarly, the firms and companies to whom invoices have been issued by SCIT without actual supply of goods and services are also to be examined.”
The court rejected the bail plea of Mehta and sent him to the judicial custody.
Investigations on seven companies and two CAs have confirmed that fake invoices were issued at the directions of Mehta
—Ajit Kumar Karthikeyan, DGGI
By Pune Mirror