GSTauthorities quiz auto

dealerson fakeinvoicing Investigators suspect

SHRIMI CHoUDHARY
New Delhi, 25 April TAX TROUBLE nexus, examining
Certain automobile dealers appointed by invoices raised by
Expanding investigation into allegedly insurers/insurance intermediaries allegedly intermediaries
wrongful claims of input tax credit by billed commission in excess of Irdai cap
insurance companies, the tax
At least 120 insurance
authorities are probing asection of auto- Intermediaries allegedly generated bogus intermediaries under
mo dealers who have supposedly invoices in the name of marketing and sales
cenerated fake invoices without niehabte service in collusion with insurance cos DGGI Scanner
ing any service, which isa
offence under goods and services tax Show-cause notices issued to 3-4 big
(GST) law. insurance firms, some intermediaries
The authorities are learnt to
have questioned the car Total tax evasion suspected to
dealers to explain ti ne services be around 2,500crore
they provided
insurance com
general IMAGING: AJAY MOHANTY

panies.
The investi
gators suspect sions. However, it doesn't have an
car dealers pitched for impact on the ongoing cases.
insurance schemes that give In the GST regime, issuing an
them commissions in excess of depending on the proinvoice without supply means a jail term
those insurance regulations permit. ducts prescribed by the up to five years if the amount involved
Fake invoices were being raised, Insurance Regulatory and is5 crore or above.
without an underlying supply of serv- Development Authority of India Along with that there is a 100 per
ices, and, on the basis of those, insur- (IRDAI). The IRDAI has, effectively from cent penalty. And the registration of the
ance firms claimed input tax credit, two Aprill, removed separate limits for fake invoice issuer could be also can
officials privy to the probe said. mission and has imposed an overallceil- celled. The offence is not bailable.
Notably, the limit is 15-20 per cent, ingon operating expenses and commis Turn to Page 6
 services to insurance compa- this
FROM PAGE 1 nies. Proof of marketing sery- thou
ices needs to be given with rel- that
GST...
Along with that, there is a 100
evant contracts and data, hence was
it is essential to prepare for it," coul
said MSMani, partner, Deloitte Blac
per cent penalty. And the reg- India. ker
istration of the fake invoice Automobile dealers who sell ante
issuer could be also cancelled. insurance on behalfof an insur Moc
The offence is not bailable. ance company or any interme exist
"The tax evasion in this case diary are known as motor not
is suspected to be around insurance service providers. ly. S
2,500 crore, which is much They are appointed by the ing
higher than the earlier estimate insurer or the insurance inter- aske
of 1,000 crore. As the probe mediary to distribute or service and
progresses, we could see a motor insurance policies of basi
nexus between insurance com- automotive vehicles sold guai
panies and lots of such inter- through it. In general insur- funo
mediaries flouting regulations ance, 40-50 per cent is motor Stoc
to avoid tax. The matter is to be insurance and a significant cont
decided soon," a senior govern- amount is sourced through ont
ment official told Business automobile dealers.
Standard. The move is to widen The dealers raised two bills. to su
the investigation the One was as commission within a st
Directorate General of GST the prescribed limit and anoth- imp
Intelligence (DGGI) has er one under infrastructure and
launched against l6 insurance marketing expenses, one of the wel
companies since September two officials cited above said. said
last year, for allegedly paying Sales of passenger vehicles on t
commissions as high as 60-70 in India grew 26.7 per cent in mov
per cent to intermediaries like 2022-23, the auto industry body imp
these, and then availing them- data has showed. In 2022-23, requ
selves of input tax credit on the sales of cars from manufactur Brol
bills raised in the name of mar- ers to dealers were 38,90,114 arra
keting and sales services. units as against 30,69,523 units inte
So far three-four show- in the previous financial year. bor
cause notices have been served Typically, in the first year, a str
to some top insurance compa- premiums on insurance for a the
nies, seeking justification for passenger car vary between4 kets
claiming input tax credit. per cent and 6 per cent of the pare
Besides, the intermediaries too price of the vehicle. CEC
have got notices from the inves
tigators in the same matter. the
About 100 intermediaries,
both online and offline aggre
a
Sebi... ure
yea
gators, have been questioned "Earlier, ifthere was 100 lying qua
so far in the case. "Automobile in a client's account, brokers by
dealers who have billed com- used to create a fixed deposit of date
missions in excess of thoseper- 100 and take additional bank fun
mitted could be asked by the guarantee of 100 on it, taking ban
GST authorities to justify their the total collateral to 200. In mer