The Anti-Evasion wing of the Raigad Commissionerate has arrested a Mulund-based businessman for Goods and Services Tax (GST) fraud involving fake invoicing to the tune of Rs 887 crore on which he allegedly availed an input tax credit of Rs 120 crore. As per investigators, Pritesh Kirtikumar Shah, 36, had floated 40 shell companies dealing in iron and steel in Mumbai, Navi Mumbai and Raigad. These companies traded with each other on paper but there was no physical transfer of goods. Shah generated fake invoices through this circular trading and received the input tax credit from the government. During the course of the investigation, officials found that he was earlier arrested by the CBI for taking a loan of Rs 50 crore from a bank on the basis of forged documents. Shah has been charged under the relevant sections of the CGST Act and remanded in police custody for 14 days.
Raigad GST Commissioner Shravan Kumar said further investigation is under way. Another official said evidence points to Shah being a habitual economic offender. The officials said Shah has a family bungalow in Mulund, owns three cars and several shops across the city. He started floating many of the shell companies in 2012. Some of these firms were floated after the GST came into force. These shell companies, according to officials, were also engaged in trading with at least 15 other genuine businesses, which are also now under the scanner. “Establishing trading with these genuine firms will take some time as many of these companies are not within our jurisdiction,” said the source. For the past one year, Anti-Evasion departments of commissionerates across the country have become more vigilant about cases involving fraudulent use of input tax credit. This is the third major case of this kind in which arrests have been made. “These frauds hugely impact the GST revenue collection,” informed the officer.
In order to weed out such malpractices, the commissionerates have started analysing the database of all the companies that pay GST and receive the credits. “In this case, we noticed there was no payment of taxes but credits were being availed. This made us suspicious and we decided to visit some of the firms owned by Shah,” the officer said. During site inspection, it was found that most of them existed only on paper and didn’t have any physical offices. The officer also said that investigators analysed the data pertaining to E-way bills available on the portal of Good and Services Tax Network, the IT backbone of GST. “It was found that most of the vehicles whose registration numbers were provided as those used for carrying the supplies traded were motorcycles, cars and tankers. Some license plate numbers had no records in the ‘Vahan’ portal at all,” the officer said.