Traders often buy fake bills to claim input tax credit on supply that never occurred.
Mumbai: The central Goods Service Tax (GST) officials of Thane Commissonerate arrested two businessmen and a chartered accountant for allegedly floating fake companies and fraudulently claiming input tax credit on transactions of over Rs 60 crore on Wednesday.
According to the Thane Commissonerate, the Input tax credit allows taxpayers to claim their credit for taxes paid on purchase. Traders often buy fake bills to claim input tax credit on supply that never occurred.
Businessmen Babulal Choudhary floated the fake companies with Dharmendra Pandey and CA Rajesh Sharma used to execute the firms on fake names. The payments received in the name of the supplying company by way of cheque or online transfer were withdrawn and returned to the company in cash.
Choudhary paid people Rs 15,000 for allowing their names to be used to set up such companies and obtain GST registration. Pandey is one of those who allowed his name to be used, read the remand application filed by the department.
Sharma helped Choud-hary in filing periodical returns despite being fully aware that there were no physical movement of goods and only paper transactions were taking place.