Massive GST Fraud Uncovered in Gujarat: Over 200 Bogus Firms Involved

In a significant crackdown on tax evasion, a joint team of officials from the CID Crime, Economic Offences Wing (EOW), and Special Operation Group (SOG) conducted raids at 14 locations across Ahmedabad, Junagadh, Surat, Kheda, and Bhavnagar on October 7. This operation aimed to combat the widespread bogus input tax credit (ITC) scam, which has been plaguing the Goods and Services Tax (GST) system.

The investigation uncovered approximately 220 businesses and individuals involved in this fraud. These entities were operational in various parts of the country, exploiting the GST operations based on fake identities and fraudulent documents. The scam reportedly occurred between February 2023 and the end of April 2023, with the Directorate General of GST Intelligence (DGGI) lodging a formal complaint to initiate the investigation.

One of the key culprits, Dhruvi Enterprise, was found to have fabricated rent agreements and submitted them to DGGI to fraudulently claim input tax credit. The company also issued fake bills to facilitate bogus ITC claims for other entities. It was discovered that multiple GST registrations were obtained using the same PAN card across different locations.

Dhruvi Enterprise provided ITC to 12 companies, while it also claimed credit from companies whose GST registrations had already been cancelled. Among the defaulters were companies like Nemis Traders and Solanki Enterprise, which continued to claim ITC despite having their registrations cancelled.

The investigation further uncovered that a single mobile number and email ID were used to register six GST accounts. This fraudulent operation created a network of 34 companies and obtained an additional 186 registrations, with 50 of them located within Gujarat.

Arrests and Investigations

In a related development, journalist Mahesh Langa was arrested by the Ahmedabad Crime Branch on Tuesday for his alleged involvement in the GST scam. Langa is a journalist with The Hindu in Ahmedabad. His arrest came after the Crime Branch, Economic Offences Wing, and Special Operations Group raided 14 locations across Gujarat on Monday.

The complaint pertains to an alleged scam in which several bogus companies were floated to defraud the government exchequer by availing bogus input tax credit. The usage of forged documents and identities for creating such firms with intent to orchestrate evasion of duty by adopting fraudulent means has also been observed.

Ajit Rajian, deputy commissioner of police at the Ahmedabad Crime Branch, stated that Langas wife had been named as the promoter of one such bogus firm suspected of creating fake bills. When questioned, Langas wife denied any knowledge of the activities and claimed it was her husband who managed everything.

The deputy commissioner claimed that unaccounted cash worth Rs 20 lakh and some land records were found at Langas home. Among the companies named in the first information report registered in the case are Dhruvi Enterprise, Om Construction, Raj Infra, Haresh Construction Company, and DA Enterprise.

Impact and Future Action

The total value of fraudulent billing in Gujarat has surpassed 50,000 crore. This massive fraud has significant implications for the state's economy and tax system. Authorities are continuing their scrutiny of the scam, ensuring that all involved parties are brought to justice.

The CGST scam is now under further scrutiny by the respective authorities. This crackdown aims to restore transparency and integrity in the GST system, preventing such widespread frauds from occurring in the future.

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