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1. A large number of proprietorship / partnership firms registered with Gautam Buddha Nagar and other Commissionerates of Delhi NCR which were apparently connected and had claimed huge amount of refunds against accumulated Input Tax Credit (ITC) on account of inverted tax structure and Zero-rated supply of Goods were identified.
2. Searches were conducted on 13.3.2020 by officers of CGST Gautam Budha Nagar along with other Commissionerates at various places declared as principal places of business and residential premises located in Delhi, Faridabad, Gurgaon, Noida and Greater Noida.
3. During the search,none of the firms were found to be existing/ operational at their declared premises.
4. Further investigations revealed that two persons, apparently masterminds behind the racket, had obtained KYC documents from proprietors/ partners of these firms for a consideration.
5. All the business activities were found to be only on paper without actual movement/ supply of goods which included manufactured/unmanufactured tobacco, yarn, woven fabric & cotton yarn, other made up clothing, etc.
6. These firms had generated invoices for passing on Input Tax Credit ascertained to be Rs 1892 crore so far.
7. Refund claims amounting to Rs 264 crore have been paid to these firms, out of which Rs.60 crore have been recovered so far. In addition, pending refund claims of approximately Rs 131 crore have been withheld.
8. Residential premises of suspected masterminds were also searched on 15.03.2020 and their statements recorded.
9. Based on their confessional statements, they have been arrested on 16.03.2020 under Section 69 of CGST Act.
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