Syndicate Rs4,521 crore tax avoidance scam with 636 companies exposed by DGGI

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It looked more like a crime investigation thriller when the Directorate General of Intelligence GST (DGGI) busted a planned tax evasion racket all over India and unearthed Rs 4,521 crore of tax evasion.

A series of raids and investigations finally brought the DDGI to Kolkata, once infamous as the lair of fake business racketeering, in the post-demonetization era.

The DGGI discovered that a union was involved in operating around 636 companies, based in different cities and misleading the government with false tax invoices.

It all started with a case, initiated by the DGGI against bogus companies, which turned out to be non-existent at their main establishment.

To trace the real people behind these fake companies, the physical address from which the GST returns were actually filed was verified.

A search was conducted on January 6 at these premises in Delhi. During the research, the owner was found to provide “Cloud Storage” services on its servers to various clients for managing their financial accounts.

Upon close examination of one of the suspect servers, details of certain companies were found in Tally’s data. He was informed by the owner that this Tally data is kept by a syndicate based in Kolkata.

The contact details of these people were obtained from the owner and then searches were carried out at various premises in Kolkata on 10 January.

During the search, a huge amount of incriminating documents including mobile phones, various checkbooks, stamps from various companies and SIM cards were recovered. During the analysis of electronic devices, documents, mobile phones and emails of these people, it was found that these people were remotely maintaining data on the server found at the premises in Delhi.

Examination of Tally’s data showed that there are 636 businesses operated by this syndicate. The mastermind of the union admitted that they only issued invoices in these companies and did not supply any goods against them.

They issued invoices with a rateable value of around Rs 4,521 crore having an ITC involvement of around Rs 741 crore.

The mastermind behind all the racketeering has been arrested and further investigation into the matter is underway.

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