In one of its biggest crackdowns this year, the Ahmedabad zonal unit of the Directorate General of GST Intelligence (DGGI) unearthed a sprawling fake GST invoicing racket worth nearly Rs. 800 crore and arrested four key conspirators across three separate cases.
The investigations, which spanned Ahmedabad, Rajkot, Bhavnagar, Junagadh, Jamnagar, Mumbai and Chandrapur, pointed to an organised network built on shell firms, forged identities, and virtual infrastructure to generate fraudulent input tax credit (ITC) without any actual movement of goods.
In the largest of the three cases, involving bogus invoices valued at Rs. 550 crore, DGGI arrested Badre Alam Pathan and Taufik Khan from Ahmedabad on Nov 27. Khan, proprietor of A H Engineering Works, allegedly procured fake invoices worth Rs. 45 crore and availed fraudulent ITC of Rs. 8.86 crore. Officials said the due, along with absconding accused including Ikram Khan, set up multiple firms using forged documents, appointed dummy directors, and operated the entire network online to mimic legitimate business activity.
Searches across Mumbai, Chandrapur, Ahmedabad, Rajkot, and Bhavnagar led to the seizure of incriminating material, records of shell companies, mobile phones, and SIMs linked to various GST registrations, digital files, bank details, and cash transaction logs.
“The syndicate bought dormant companies with active GSTINs, altered their doctors and addresses, mass-generated fake invoices, and routed cash reversals through hawala channels. These entities issued bogus invoices largely to iron and steel manufacturing units in Ahmedabad, Jamnagar, Rajkot and Maharashtra, which are now under scrutiny for possible tax evasion and clandestine clearance,” said Rajesh Kumar, Additional Directors, DGGI, Ahmedabad Zonal Unit.
DGGI has urged owners of dormant firms not to hand over their GST registrations to intermediaries and instead surrender them free of cost if they have ceased operations.
In a parallel case, Hardik Raval, partner of Bharat Sanitary & Fitting in Junagardh, was arrested on November 25 for masterminding a network of 47 dummy firms. Officials said the fraudulently availed ITC of Rs. 28.02 crore on bogus invoices amounting to Rs. 110.57 crore without receiving any goods. “He allegedly issued outward invoices worth Rs. 83.64 crore to pass on fake ITC of Rs. 20.24 crore to multiple buyers The operation involved intermediaries , angadiya channels, and layered fund transfers through banks. Digital evidence and voluntary statements have corroborated his role,” DGGI said.
In the third case, linked to Jamnagar’s brass and steel trade, Jaydeep Virani, partner of Patel Metal Craft LLP, was arrested on Nov 28. He allegedly availed inadmissible ITC of Rs. 22 crore based on fake invoices valued at Rs. 121 crore issued by more than 40 non-existent firms. Searches across Jamnagar and Rajkot yielded cheque books, documents, mobile phones, computers, and other evidence. Officials said several Jamnagar-based entities were found using bogus invoices to mask unaccounted sales of scrap, brass, and stainless-steel products.
Fraudulent ITC claims of over Rs.5 crore constitute a grave economic offence under Section 132 of the CGST Act, attracting imprisonment of up to five years and fines. The offences are cognisable and non-bailable. DGGI said voluminous evidence seized across locations is being examined to map the wider network and identify end beneficiaries.
Source: The Times of India
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