The tip-off to the I-T department came from the sales tax department of the state government which came across over 2,000 agents supplying fake bills, who operate from Mumbais Girgaum and Kalbadevi areas.
Based on the information, the I-T department is planning the largest sweep on traders and small-time manufacturers for tax evasion in Indias richest revenue jurisdiction.
The department has landed on this treasure trove through the back-end IT platform created for Goods and Sales Tax (GST), which has begun matching sales with I-T returns.
The agents provide false invoices for the traders and manufacturers to mask their profit from sales. An official told The Indian Express that the frauds came into light when assessess uploaded their audited accounts along with annexures of purchase and sales on the sales tax department website. When the department turned over the data to the I-T department, as envisaged under the proposed Goods and Services Tax regime, the discrepancies between the sales and purchases started tumbling out.
As of now, the two departments have found 42,315 such records that have been put under the scanner. The papers have been used by the traders and manufacturers even for procuring loans from banks. Sectors including iron and steel, paper and chemicals are most susceptible to the fraud, the official added.
Of these nearly 10,000 cases have been sent to the various intelligence departments in the revenue machinery for investigation.
Stunned by the scale of the evasion, which has brought both the direct and the indirect tax departments into play, the Central Economic Intelligence Bureau has written to the chief secretaries of all the states to detect similar frauds. They have been suggested to replicate the action as it can be a major revenue earner for the Centre and the states, the official said, adding, it would take almost a year to investigate all the cases.
While these type of cases have become increasingly visible in recent years, it is the size of the catch this time that has surprised the tax officials.
In last financial year, the total amount of such evasion detected by the sales tax department was Rs 53,193 crore for the whole of India. The department had then picked up the top 121 cases where investigation showed that bogus purchases amounted to Rs 8,101 crore, with undisclosed income of Rs 1,995 crore.