The managing director of a leading iron and steel company with multiple manufacturing units in Telangana was nabbed by the Hyderabad GST Commssionerate for fraudulently availing input tax credit to the tune of ₹ 4 crore.
The Hyderabad GST Commissionerate, after searches conducted at two premises of the factory and residences, respectively, of a leading iron and steel firm having a ₹ 600-crore turnover per annum, arrested the managing director, who availed illegal input tax credit of around ₹ 4 crore on the strength of fake invoices, to the extent of ₹ 45 crore issued by three shell companies, two of them based at Kadapa and one at Rajahmundry. A senior GST Commissionerate official told The Hindu on Saturday that recovery of ₹3 crore has been made and it is first-of-its-kind case in Telangana and Andhra Pradesh States, wherein the ultimate beneficiary, who could possibly be the architect of all these shell companies has been arrested and immediate recovery has been made.
Shell companies
The arrest of the ‘ultimate beneficiary’ — in this case the owner of the iron and steel factory — has brought to light the floating of shell companies and creating fake invoices to avail input tax credit. It was in November last year that six persons were arrested for issuing fake invoices worth hundreds of crores, but most of them were running shell companies and issuing fake invoices and facilitating transmission of illegal input tax credit.
