Mumbai businessman arrested for running fake GST input tax credit network worth over Rs 63 crore

A Mumbai businessman was arrested for running a fake GST input tax credit network worth more than Rs 63 crore.

Bhiwandi Commissionerate of Central Goods and Services Tax (CGST) Mumbai Zone has arrested a businessman who was running a fake GST Input Tax Credit racket, the Finance Ministry said on Saturday.

"Acting on intelligence from the Central Intelligence Unit of Mumbai CGST Zone, the officers initiated coordinated action at different locations in Thane, Bhiwandi, Raigad, and Mumbai and detected GST evasion of Rs 11.4 crore through generation and passing of fake ITC through intricate web of bogus billing of more than Rs 63 crore," the ministry said in a statement.

The search was conducted at the Bhiwandi-based business premises of M/s. Adarsh Scrap Traders, which was indulging in bogus billing and availment and passing on fake ITC, thus defrauding the government exchequer of its rightful GST revenue.

The initial investigation revealed that a firm had fraudulently claimed and passed on an input tax credit (ITC) of Rs 11.4 crore without any actual supply or receipt of goods.

The proprietor of the firm confessed to the bogus billing and running of a fake ITC racket. He was arrested on January 21, 2022 under Section 69 of the CGST Act, 2017.

The amount of fake ITC involved is likely to go up during the ongoing investigation once the entire network is investigated. The roots of this network are spread across the cities of Nagpur, Pune, Delhi, and Nasik, apart from Mumbai and Thane. At this stage, it seems that around 25 entities are part of this network. Jurisdictional Commissionerates are being informed to initiate legal action against the firms falling under their jurisdiction, the ministry said.

This operation is a part of efforts by CGST Mumbai Zone to eradicate fake ITC networks, which have been vitiating the healthy economic ecosystem of the country and defrauding the government exchequer.