The investigation wing of the state Goods and Services Tax (GST) department has unearthed a major bogus input tax credit (ITC) scam in three separate incidents after search and raids at 71 locations across the state.
The tax authorities have arrested two individuals for running a racket of generating bogus bills and selling them on a commission basis. Total bogus billing or fake transactions unearthed in these three cases are worth Rs1,741 crore and illegal ITC is worth Rs319 crore, official sources said.
In the first instance, Madhav Copper Limited, a company based in Bhavnagar was raided by the department. “There was specific intelligence that Madhav Copper was taking fake ITC based on bogus billing and showing purchases that are not real. A parallel search at all places, from where the company had shown purchases was also searched by the department. It has been found that the firm is involved in showing bogus purchases worth Rs425 crore and had claimed illicit ITC worth Rs75 crore,” officials added.
Further investigation in Bhavnagar and other premises in the case related to Madhav Copper is going on. Searches were carried out at 42 places in Bhavnagar, 17 in Ahmedabad, five in Gandhinagar, four in Surat, two in Rajkot and one place in Prantij.
The department also had inputs that there are individuals who are running fake bogus billing rackets. Two residents of individuals – Meenaben Ragnsinh Rathod (resident of Prantij) and Afzal Savjani (resident of Bhavnagar) – were raided by the department.
“It was found that luring people to help them get loans, Meenaben Rathod had collected know your customer (KYC) documents from 32 individuals. Of these, KYC documents of 24 were used to get GST registration numbers. Meenaben had generated bogus bills worth Rs577 crore in the names of these GST numbers and had claimed illicit ITC worth Rs109 crore,” an official said. Meanwhile, Afzal Savjani had also generated fake transactions worth Rs739 crore and claimed illicit ITC worth Rs135 crore.
“We have arrested Meenaben and Afzal under the GST Act and have demanded further interrogation of both before the court,” officials said.
It should be noted that since the implementation of the GST in July 2017, the state GST department has unearthed a total of 705 fake billing, illicit ITC cases involving duty evasion worth Rs2,551.25 crore.