CGST Officials Busts Fake ITC Racket of Rs.15 Crore; One Arrested

Officers from the CGST Commissionerate Mumbai East Zone’s Anti-Evasion Wing discovered a bogus Input Tax Credit (ITC) Network and arrested the Director of a Kurla-based company for GST fraud.

An investigation was launched against M/s Lakshin Metals Pvt. Ltd. based on a tip from the Central Intelligence Unit of Mumbai zone, which revealed that a fake Input Tax Credit (ITC) of Rs.15.26 Crore was obtained and passed on without actual receipt or supply of goods, in flagrant violation of the provisions of the CGST Act, 2017. A network of roughly 15 businesses was constructed for this fraud, and fake invoices totaling more than Rs.84 crore were generated.

During the investigation, a statement from a director of this company was recorded, in which he admitted to his involvement in the GST fraud. On May 19, 2022, he was arrested under Section 69 of the CGST Act, 2017 for violating Section 132 of the CGST Act, 2017. On 19.05.2022, he appeared before the Hon’ble Additional Chief Metropolitan Magistrate, Esplanade. He has been remanded in judicial custody for 14 days by the Magistrate.

Officers from the Central Intelligence Unit use data analysis and network analysis techniques to identify possible fraudsters and share the information with jurisdictional Commissionerates for further investigation. This prosecution is part of a specific campaign conducted by the CGST Mumbai Zone against fraudsters and bogus ITC network dealers who have been causing unfair competition for honest taxpayers.

During the financial year 2021-22, the CGST Mumbai East Commissionerate discovered Rs.1002 crore in GST evasion, recovered Rs.124 crore, and arrested two tax evaders. In the coming days, the CGST Mumbai East Commissionerate would step up its crackdown on fraudsters and bogus businesses involved in the obtaining and passing of bogus ITC.