Daya Shankar Kushwaha was arrested by tax officers in New Delhi for allegedly using fake invoices worth over Rs 1,200 crore to get tax benefits, according to reports on Monday (Feb. 3).
The accused allegedly tapped a network of 49 shell firms for the business to business (B2B) scam that defrauded the government. Kushwaha reportedly used fraudulent Input Tax Credit (ITC) of Rs 124 crore.
He reportedly had two different PAN cards, which he used to create the initial 14 companies. The remaining 35 firms were created by stealing identities by using KYC documents belonging to people of lower means. All told, he allegedly created 297 firms, according to the Anti-Evasion wing of the Central Tax department.
“In all, the accused had created 297 firms some of which were used for banking transactions and others were just parked on the shelf for using later,” the statement issued by the Delhi West Commissionerate said.
“Fake invoices were issued to buyers, who avail the fraudulent input tax credit without actually receiving any goods. Daya Shankar Kushwaha also admitted to investigators that no actual movement of goods took place against the invoices, which has been corroborated through data mining on the NIC’s e-waybill portal,” the statement said.
More than 60 bank accounts were used for “circular transactions to make them appear genuine,” according to reports.
When it comes to B2B payment scams, it’s not only outsiders but entities’ own internal personnel that is often the cause of fraudulent activity. A PYMNTS’ examination of recent cases finds employees falsifying invoices, doctoring checks and faking out companies to steal money from employers.
The majority of businesses are at risk for an array of cybersecurity incidents, including the business email compromise (BEC) scam, which often sees fraudsters spoofing legitimate email addresses from vendors, and sending seemingly real requests for payment.
The cybersecurity publication Naked Security reported that $6 million was stolen from a New York company via invoice fraud.