The State GST Department has busted an alleged input tax credit (ITC) fraud involving bogus transactions worth more than ₹128 crore and arrested two persons, including the proprietor of a Jamnagar-based firm and his son, officials said on Tuesday.
According to a press release, the Department conducted coordinated search and seizure operations on June 16 across 22 firms located in Jamnagar, Rajkot, Ahmedabad, Gandhinagar, Vadodara, Surat and Bhavnagar after receiving specific intelligence inputs and carrying out detailed analysis. M/s Mandovara Trading Co. was among the firms searched.
During the operation, officials arrested Sureshchandra Moolchand Shah, proprietor of M/s Mandovara Trading Co., and his son Ayush Sureshchandra Shah for their alleged involvement in GST evasion exceeding ₹23.08 crore.
Investigations revealed that the firm allegedly claimed fraudulent input tax credit by recording bogus purchases of brass and copper scrap through non-genuine transactions. Preliminary findings indicate that the company reflected fabricated transactions worth over ₹128 crore through a network of bogus firms without any actual movement of goods, allegedly causing a tax loss of more than ₹23.08 crore to the government exchequer.
The Department said wrongful availment of ITC is an offence under Section 132(1)(c) of the GST Act, while issuing fake invoices to pass on tax credit attracts provisions under Section 132(1)(b). The arrests were made after investigators established the alleged involvement of the accused in the racket.
Officials said the probe is ongoing and further tax evasion as well as additional GST liabilities may surface during the course of the investigation. The State Tax Department has initiated legal action and said it will continue efforts to recover government revenue and curb tax fraud.