Karnataka’s commercial tax department on February 29 said they have arrested four people involved in a cartel engaged in counterfeit transactions of scrap goods, leading to tax evasion amounting to Rs 180 crore.
Officials said they busted a cartel executing a massive tax evasion scheme, exposing a network of fraudulent Input Tax Credit (ITC) transactions involving nearly 100 firms with a total turnover of Rs 1,008 crore.
The alleged mastermind, Mohammad Siddiq, was apprehended on January 17, followed by the arrest of his close associate, Imtiaz of Bantwal, on January 22. Sameer Pasha, their partner, was arrested on February 8, and the fourth accused, Soni Vishwas, closely associated with cartel members, was arrested on February 23 after an extensive month-long chase across various states.
C Shikha, Commissioner for Commercial Taxes, in a statement, said, “Vishwas had managed to evade authorities by constantly changing locations and obtaining multiple mobile SIM cards. A collaborative effort involving teams from Kalaburgi, Hubballi, Bellari, and Malnad divisions, along with assistance from Karnataka police, railway officials, and state GST authorities of Maharashtra, eventually led to his arrest after a 24-hour pursuit.”
Modus operandi
“The arrested individuals were part of a sophisticated operation that involved creating multiple registrations in Kerala, Tamil Nadu, and Karnataka based on fabricated documents. Fake tax invoices were supplied throughout the multi-level chain without actual goods transactions, enabling beneficiaries to avail of Input Tax Credit (ITC) without fulfilling tax obligations,” explained Shikha.
“The cartel exploited PAN and Aadhar cards of unsuspecting individuals to fabricate rental agreements and obtain GST registrations. Operating these registrations for six to twelve months, the members orchestrated transactions worth several crores without paying any taxes,” she said.
In an attempt to launder the evaded tax money, the cartel employed a unique method of converting accounted funds into cash through the ‘Retail Payment and Settlement System of the National Payments Corporation of India (NPCI).’ Channels associated with Banks and Fintech Companies served as conduits for these conversions, with the total value surpassing Rs 140 crore, according to Shikha.
