Major GST fraud unearthed in Mumbai

In a major operation, the Mumbai Zonal Unit of Directorate General of GST Intelligence (DGGI-MZU) has arrested four persons for allegedly passing on fictitious Input Tax Credit (ITC) amounting to a total of Rs 408.67 crore.

The four arrested are the director of Rane Megastructure Pvt Ltd, the proprietor of ACS Hardware and Networking, the director of Keshariya Metal and group companies, and the managing director of Shailaja Commercial Trade Frenzy Ltd.

The accused were sent to judicial custody till November 24, according to a press statement.

However, their names were not revealed by DGCI-MZU that functions under the Central Board of Indirect Taxes and Customs (CBIC).

On the basis of the investigation conducted, it is seen that ACS Hardware and Networking had fraudulently claimed ITC of approximately Rs 85.38 crore without any supply of goods or services and further the same amount of Rs 85.38 crore was passed on to Rane Megastructures Pvt Ltd on the strength of invoices having a taxable value of Rs 474 crore without any supply.

Rane Megastructures Pvt Ltd further passed on ITC of approximately Rs 85.44 crore to another company, without any actual supply.

“In this cartel, bogus ITC has been passed on in a linear manner, in which the ultimate beneficiary has availed and utilised ITC either for payment of their output tax liability or taking refund of unutilised ITC. Some persons of this cartel have been arrested earlier,” the statement said.

In another case, a group of companies comprising Keshariya Metal Pvt Ltd, Kajal Trading Co, Hi-Tech Impex, Gravity Alloys and Sunshine Impex was found to be involved in creating fictitious invoices with an aim to avail and pass on of ineligible ITC on the strength of only invoices, without any supply of goods or services. In this manner, they have availed and passed on ITC cumulatively amounting to Rs 103.78 crore in a fraudulent manner, without any supply of goods or services.

In a separate case, Shailaja Commercial Trade Frenzy Ltd was also involved in the issue and receipt of bogus invoices resulting in fraudulent availment of ITC amounting to Rs 48.69 crore on the strength of invoices, without any supplies. The bogus supply was used to inflate the turnover.

“As per Section 132 of the CGST Act 2017, issuance of an invoice or bill without supply of goods or services and wrongfully availing or utilisation of Input Tax Credit on a bill/invoice, without any supply of goods or services is a cognizable and non-bailable offence,” the statement said.