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GST Mumbai: Officers busts Rs 70 crore fake GST input tax credit racket

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The officers of Navi Mumbai CGST Commissionerate of Mumbai Zone have busted a fake GST Input Tax Credit racket involving GST of Rs 70 Crores. This network, which involves more than 14 business entities had issued bogus invoices more than Rs 385 Crores without any receipt or supply of goods. The network is spread across Mumbai, Navi Mumbai, Raigad, Thane, Pune and Nagpur cities.

Acting on a tip-off from Central Intelligence Unit, Mumbai CGST Zone, the officers have arrested two businessmen. One of the arrested businessman is a director of M/s Omnipotent Industries Limited which has floated a public issue recently and another one is proprietor of M/s Shree Bitumax Trading.

Both the entities are registered with GST for trading in Bitumen, Asphalt, Oil Shale and Tar Sand etc. and were indulging in fraudulent availment and passing of Input Tax Credit (ITC) of Rs 20.75 crores & Rs. 11.31 crores respectively without receiving the goods or services, in violation of the provisions of the CGST Act 2017. Both these firms were availing fake ITC from non-existing entities and passing on the same to other entities of this vicious network. Other 12 entities have availed and passed on fake ITC to the tune of Rs 38 Crores.

Both Director and proprietor were arrested under Section 69 of CGST Act 2017 for contravention of Section 132 of the Act and produced before the Hon’ble Judicial Magistrate First class, Vashi today, who has remanded them to 14 days judicial custody. Omnipotent Industries got its public listing in November 2021 and possibility of misuse of funds, generated from fake ITC network, for other financial gains is also not ruled out. Further investigation is under progress and other enforcement agencies will also be informed about their nefarious activities.

This operation is a part of special anti-tax evasion drive initiated by the CGST Mumbai Zone. In this special drive, a trained set of officers is using data analytics and network analysis tools to identify fake ITC networks and potential cases of tax evasion. During this four month old drive, more than 500 tax evasion cases have been booked leading to arrest of 40 persons, detection of tax evasion of Rs. 4550 crores and tax recovery of Rs. 600 crores.

Recently, on 03.01.2022, the officers of Thane CGST Commissionerate had arrested a father-son duo for running a fake ITC network of Rs. 22 crores. On 5.1.2022, the officers of Mumbai Central Commissionerate had arrested a timber merchant, the proprietor of M/s Noor Timber for availing fake ITC of Rs. 5.47 crores from non-existing entities.

The officers of Mumbai zone are also minutely analysing business transactions related to digital economy like online gaming, Non Fungible Tokens, e-commerce to identify the areas of possible tax evasion. Recently, a case of GST evasion by crypto currency exchange WazirX was also detected by CGST Mumbai Zone and GST of Rs. 49.2 Crores were recovered during the course of investigation. The department is going to intensify the anti-tax evasion drive against the fraudsters and tax evaders in the coming weeks.


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TaxGyata Team

TaxGyata Team