GST Department busts ITC racket of More Than Rs.10 Crore; Arrests one businessman

Officers of the Navi Mumbai CGST Commissionerate of the Mumbai Zone have detained a businessman who is the proprietor of M/s Maharashtra Enterprises based on intelligence concerning the operation of a bogus ITC racket. The Central Goods and Services Tax (CGST) department has caught another another false Input Tax Credit racket, this time involving 15 phoney firms who fraudulently created fake ITCs worth Rs.10.28 crores.

The false ITC was created by generating bogus metal scarp invoices without any receipt or supply of items worth more than Rs.57 crores. Mumbai, Aurangabad, and Nasik are all part of the network.

The company was registered with the GST for trading Ferrous Waste and Scrap; Remelting Scrap Ingots of Iron or Steel – Waste and Scrap of Cast Iron, and was involved in the fraudulent availment and passing of Input Tax Credits (ITC) of Rs.5.17 crores and Rs.5.11 crores, respectively, without receiving the goods or services, in violation of the CGST Act, 2017.

By robbing the Exchequer of its due GST money and fostering unhealthy competition with honest Taxpayers, the firm was obtaining bogus ITC from non-existent entities and passing it on to other entities in this vicious network.

The accused was detained today, January 13, 2022, under Section 69 of the CGST Act 2017 for violating Section 132 of the same, and brought before the Hon’ble Judicial Magistrate First Class, Vashi, who remanded the accused in judicial detention for 14 days till January 27, 2022.

This operation was part of the CGST Mumbai Zone’s large-scale operations to wipe out phoney ITC networks that were causing excessive hardship to honest taxpayers and cheating the government exchequer of its legitimate taxes. On 08.01.2022, the Navi Mumbai Commissionerate arrested two businessmen from M/s Omnipotent Industries Limited, a publicly traded company that had been obtaining and passing on Fake ITC generated by the fake entities to the tune of more than Rs.70 crores by issuing bogus invoices totaling Rs.385 crores. In the coming days, the agency will step up its efforts to catch fraudsters and tax evaders.