Two arrested for Rs. 4.2 crore GST fraud in Gujarat

Two people were arrested for claiming over Rs.4.2 crore in Input Tax Credit (ITC) through bogus invoices in Gujarat's Bhavnagar.

The arrests come just days after a similar case involving Rs.8 crore was uncovered in Alang.

In the latest action by the Bhavnagar Central GST Department, Rakesh Ganpat Rathod, proprietor of M/s Krishna Machine Tools and a partner in M/s RR Enterprises, a resident of Bhavnagar, was taken into custody.

The identity of the other accused is being ascertained.

According to GST officials, Rathod was operating a racket involving the issuance of fake bills to various suppliers in exchange for a 4 per cent commission.

During interrogation, Rathod confessed to a well-orchestrated scheme: funds were temporarily deposited into the firm's bank account to simulate legitimate transactions, then withdrawn in cash, the commission deducted, and the balance handed over to a middleman.

He also revealed that a chartered accountant facilitated the creation of fake accounts and the filing of bogus GST returns, charging 0.5 per cent commission per transaction.

The department suspects the involvement of a wider nexus that includes a chartered accountant, a middleman, local Shroffs (money handlers), and Angadiya firms (informal couriers).

Investigations into their roles have already been launched.

Chandrabhan Maurya, proprietor of M/s Ruchi Steel in Alang, was jailed earlier this week for availing fake ITC worth over Rs.8 crore.

To prevent further misuse, the GST Department has begun proceedings to cancel the GST registrations of M/s Krishna Machine Tools and M/s R R Enterprises.

Source : https://english.gujaratsamachar.com/news/gujarat/two-arrested-for-4-2-crore-gst-fraud-in-gujarat