Central Goods and Services Tax, Mumbai West arrested Chandraprakash Pandey, a chartered accountant and partner of M/s. C.P. Pandey & Associates for indulging in circular trading and GST manipulation on transactions worth over Rs 59.10 crores (approx.).
Intelligence gathered by the GST Investigation Wing Officials, Mumbai revealed that Pandey had created numerous companies in the name of his family members which were issuing invoices without any actual supply of goods/services. Using such fake invoices, Pandey managed to avail fraudulent Input Tax Credit (ITC) on invoices involving GST of Rs 10.63 Crores (approx.) without any goods/services supplied, in violation of provisions of the CGST Act, 2017.
This modus operandi enabled buyers/other companies to avail inadmissible ITC thereby causing loss to the government exchequer and also to inflate the turnover in these companies enabling them to obtain bank loans. These transactions are nothing but paper transactions with no actual supply of goods, which in commercial parlance is circular trading.
The preliminary investigation uncovered a network of around 50 firms registered in the same premises and involved in fraudulent activity of circular trading.
Pandey was arrested and produced before a Magistrate who remanded him to judicial custody for 14 days. Further investigation is in progress.