ACB files Chargesheet for Rs.175 crore GST Refund Scam

Despite the maximum length of 60 days for verifying claim documents before awarding refunds, refunds were provided in a purposefully short period of five to fifteen days without following the proper claim document and verification process.

The addresses of the majority of the 16 bogus companies that claimed refunds were just on paper.

On paper, they didn’t do any business. According to the 11,900-page chargesheet filed by the State Anti-Corruption Bureau investigating the Rs.175 crore GST refund scam, Amit Lalge, the state sales tax inspector who appeared to be the key accused in the racket, did not visit any of these firms but cleared the refund claim within 5 days, despite the fact that it should have been cleared in 60 days without following due process of verification.

The ACB filed a voluminous chargesheet against four people on Tuesday in the special ACB court: Kiran Bhanusali, a customs clearing agent; Amit Lalge, a sales tax inspector; Farooq Shaikh, a businessman; and Farooq Contractor and Anil Runthala under the BNS sections of cheating, forgery, criminal breach of trust, prevention of corruption act, and 109 abetment.

According to the chargesheet, the alleged scam occurred between August 2021 and March 2022 at Mazgaon’s state Goods and Service Tax (GST) department building. However, it was discovered only during the department’s most recent audit. Based on the department’s accusation, the ACB charged a sales tax official named Amit Lalge and 16 anonymous traders causing the government a wrongful loss of Rs.175 crore. The scam was exposed after the sales tax department performed an investigation and discovered that a group of 16 companies had submitted 39 tax refund applications totalling Rs.175 crores without paying any taxes to the exchequer.

A scrutiny of the documents of these 16 traders revealed that they were from Ghatkopar and Kurla. These dealers’ registration papers were assigned to only three addresses in Ghatkopar, and several of them shared addresses. All of them were determined to be rented, with areas ranging from 200 to 300 square feet. The shop owners were discovered to be fake, and the documents were falsified. Only four of the 16 enterprises were registered with the ROC. During internal investigations, the money trail led investigators to a bank account owned by CHA Bhanusali, who served as a middleman in the scheme.

According to investigating officer Mohan Jagdale, he was paid a lot of money to help the gang set up fictitious companies and produce bogus shipping documents. Further investigation revealed that Amit Lalge had assisted and abetted the main accused Farooqs in giving refunds to the 16 fictitious firms, which were set up solely to defraud the government. According to the chargesheet, Amit Lalge did not verify the validity of these 16 firms before distributing the money. He openly misused his position despite the fact that he was not authorized to clear a return file worth more than Rs 5 lakh. He disregarded the protocol.

Farooq, the alleged kingpin of the GST refund scam, is the same person who was detained by the CBI in March of this year in another Rs.200 crore cheating case.

During the ACB investigation, it was discovered that the majority of these fictional organizations did not exist; if they did, they shared addresses and no businesses were conducted on the premises. This address was used solely to approve refunds.

Furthermore, the owners of the properties listed above have never engaged in a tenancy arrangement with the taxpayers. The tenancy agreement for the business premises presented to the GST department was discovered to be fraudulent. Since all of the above 16 taxpayers were registered for the first time, the tax refund approving officer, Amit Lalge, purposefully ignored the requirement for taxpayers seeking refunds to verify whether the goods were exported by the exporting companies and vice versa for merchant exporters who filed zero or no returns at all.

Even though it was required to deny the reimbursement claim by stating that there was no export, this was purposefully overlooked. The Principal Commissioner CGST notified the GST Department that the above-mentioned companies (Virtual Overseas and Onyx Enterprises) were bogus. Amit Lalge ignored this, according to the chargesheet. More than six people have claimed that they gave the accused their Aadhaar card on the promise that they would receive a big monthly salary.