The Anti-Evasion Branch of the Central Goods and Services Tax, Delhi South Commissionerate has arrested a director of a private limited company engaged in smartphone trading for fraudulent availment of input tax credit. The alleged fraud involved Rs 605.9 million (mn) of input tax credit obtained through bogus invoices totalling Rs 3.9723 billion (bn). The conduct was said to contravene Section 16 of the CGST Act, 2017 and attract penalties under Section 132.

Analysis of GST return data and verification of the supplier entity's declared place of business indicated that the premises was a co-working space rather than an operational warehouse or office. Investigators found no books of account, stock records or invoices that would demonstrate genuine trading activity. The absence of documentary evidence prompted further scrutiny of the transactions recorded in the returns.

During the inquiry the director reportedly failed to provide a satisfactory explanation of the firm's operations or the mode of payment for the alleged supplies. Investigators were unable to trace any verifiable payment trail corresponding to the purported supply of goods, which indicated that the transactions were non-genuine paper entries created solely for the fraudulent passing and utilisation of input tax credit. The director was identified as the direct benefactor of the evasion.

The person arrested was produced before the Duty Magistrate and remanded to judicial custody for 14 days. The case has been registered under Section 132(1)(c) and is punishable under Section 132(1)(i) of the CGST Act, 2017. The commissionerate stated that it has already launched prosecutions against 45 fraudsters in the current fiscal year as part of its ongoing enforcement drive nationwide.