Goods and services tax (GST) authorities have initiated prosecution against a leading online insurance intermediary for allegedly generating bogus invoices of around Rs. 100 crore in the name of marketing and sales service.
The intermediary, based in Bengaluru, got prosecution notice in January from the Directorate General of GST Intelligence (DGGI).Following this, the top management of the firm has been questioned.
“The intermediary has been asked to provide proof/evidence of the service (they claimed) against which invoices were raised. In the absence of proof, the owners could face rigorous punishment,” a source in the DGGI said.
According to Section 122 of the Central GST Act, “issuing an invoice without supply” attracts a penalty and imprisonment up to five years if the amount involved is Rs. 5 crore or above. The offence is not bailable.
The move is to widen the investigation the DGGI has launched against insurance companies allegedly paying commissions as high as 70 per cent to intermediaries like these and even offline agents.
The limit is 15 per cent, prescribed by the Insurance Regulatory and Development Authority of India (IRDAI). Explaining the modus operandi, sources said insurance companies had formed an arrangement with intermediaries “to pass on ineligible input tax credit (ITC)” in the guise of marketing service and raising fake invoices.
