Bengaluru, Jan 5 (NationPress) In a major setback to tax evasion schemes undermining India's Goods and Services Tax (GST) framework, the Enforcement Wing (South Zone) of Karnataka's Commercial Taxes Department has successfully unveiled and dismantled a vast interstate fake invoicing network.

This operation, spanning across Karnataka and Tamil Nadu, has revealed fraudulent transactions amounting to an astonishing Rs 1,464 crore in construction materials such as cement, iron, and steel. This illicit activity led to the wrongful claiming and passing of Input Tax Credit (ITC) valued at approximately Rs 355 crore, all executed without any actual movement of goods.

The breakthrough was achieved through advanced analytics within the GST system, as stated on Sunday.

Utilizing their proprietary Non-Genuine Taxpayer (NGTP) module and tracking IP address trails from the GST backend, investigators identified suspicious invoicing patterns and circular ITC flows among linked entities. This data-centric strategy initiated a carefully orchestrated enforcement action, underscoring how technology is transforming the battle against fiscal fraud, according to the statement.

Further investigations revealed a complex network of deceit; the fraudsters obtained multiple GST registrations utilizing forged documentation, including online-purchased stamp papers, counterfeit rental agreements, falsified signatures, bogus tax receipts, and fake notarial stamps. These fraudulent registrations led to the creation of numerous shell companies that issued fake invoices, mimicking legitimate operations while facilitating unlawful credits.

After siphoning off significant ITC, the entities conveniently opted to cancel their registrations voluntarily, a tactic that investigators describe as a novel method to evade audits and eliminate traces. This emerging trend has prompted the Enforcement Wing to consider new measures to close such loopholes in the system.

The operation culminated in synchronized search and seizure raids across Bengaluru, Chennai, Vellore, and Pernampattu, resulting in the recovery of a wealth of evidence: 24 mobile phones, 51 SIM cards, two pen drives, bank statements, and rubber stamps from various firms. These items are expected to shed further light on the cartel's operations, finances, and cross-border connections, the statement added.

Marking a significant achievement in interstate cooperation, four key figures were apprehended, with Tamil Nadu's Commercial Tax authorities playing a crucial part. Brothers Irbaz Ahmed and Nafiz Ahmed from Tamil Nadu, linked to fraudulent enterprises like Trion Traders, Wonder Traders, Royal Traders, and Galaxy Enterprises, were arrested in Pernampattu.

In Bengaluru, Eddala Pratap and his associate Revati, who operated shell companies such as Power Steel and Cement, P.R. Construction, S.V. Traders, and S.R.S. Cement Steel Traders, were also detained, according to the statement. All four individuals appeared before Bengaluru's Special Court for Economic Offences, where they were remanded to 14 days of judicial custody.