Central Excise Intelligence wing (DGGSTI), Zonal Unit, Ahmedabad on Friday, busted a big GST input credit scam involving fake billing of Rs 400 Crore that was in process through a novel modus operandi.

Two North Gujarat based parties on the name of over twelve firms, generated paper invoices worth Rs 400 Crores and passed on fraudulent Input Tax Credit of over Rs. 70 Crores.  This is the biggest tax scam unearthed in the GST era in Gujarat. Three kingpins have been arrested and they were produced before ACJM court. The ACJM court had remanded three accused to judicial custody.

Press release of DGGSTI says it arrested three persons from Ahmedabad, namely Mitesh s/o Roshanlal Shah of Arihant Metal, Badal s/o Shambhulal Lalwani of Rajat Metal and Mitesh Patel, Director of M/s Nandeshri Steel Ltd. Arihant Metal and Rajat Metal generated bogus invoices and the beneficiary in this case is Nandeshri Steel Co, who availed input credit without receiving the goods physically.

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Previous Excise and VAT experience suggests that the metal industry, especially, the one who procures scrap as their input for manufacture of final products in their manufacturing units have been indulging in availing credit on such fake invoices. They ordinarily buy scrap from small traders in market without any bill or invoice and transaction takes place in cash. The unaccounted scrap so purchased from such small traders is covered up by obtaining invoices from registered traders.

The release further explains that in this Rs 400 Crore scam of fake billing involving fraudulent passing on of Rs 70 crore worth of Input Tax Credit, over a dozen companies were created and were made part of the flow of documents to effectively conduct the fraudulent transactions. It is learnt that out of these twelve fake entities, just one company had issued fake billing for over Rs 100 crore and facilitated consignee with Rs 18 crore worth of ITC.

Searches have been carried out in and around Ahmedabad. However, the follow up investigations would unearth deeds of many other players in the matter.

Mahendra Kothari

Honorary Correspondent, UdaipurTimes