Mumbai: Rs 29.58 crore GST racket busted, 3 men arrested

The racket came to light following intelligence gathered during the second All India Drive against fake GST registrations. Representation Pic

The Anti-Evasion Wing of the CGST Palghar Commissionerate has exposed a Rs 29.58 crore fake Input Tax Credit (ITC) racket. After conducting investigations over several months to unearth the racket, CGST officials have arrested three men on September 12. The racket, which involved eight bogus firms, came to light following intelligence gathered during the second All India Drive against fake GST registrations.

The primary firm implicated in the scam is H&D Company, located in Palghar. Investigations revealed several linked entities, including Hinglaj Packaging LLP, which were involved in issuing bogus invoices to illegally claim and pass on ITC without any actual supply of goods or services. Thus by this fraud, the firms benefiting from the illegality reduced their tax on output on the grounds that tax has already been paid during the input process. This constitutes a blatant violation of GST laws.

The mastermind of the scam, Chirag Ashok Raval, along with his associates Swaraj Prafullchandra Dave and Parth Jitender Raval, allegedly set up multiple fake firms under the names of family members and relatives. These entities were used to generate fraudulent invoices, enabling the availing and passing of ITC amounting to Rs 29.58 crore.

All three individuals were arrested today under Section 69 of the CGST Act, 2017, for offences punishable under Section 132(1)(b) and (c) of the Act. They have been remanded to judicial custody until September 25, 2024. The CGST Commissionerate emphasised that this operation is part of a broader initiative to crack down on fraudulent ITC claims. Investigations are ongoing to uncover further entities involved in this scam.