GST officials reveal massive tax fraud of Rs 2,350 crore

The GST officials have arrested three persons – Sachin Bhoruka, Mahesh Kinger and Deepak Kumar Prajapati - involved in massive frauds of GST of over Rs 2350 cr.

Investigations revealed that Prajapati had set up an intricate web of over 22 firms that indulged in circular trading for the purpose of artificially inflating their turnover.

This is done to use Input Tax Credit (ITC) in the GST regime. Circular trading is a type of cycle that takes place when a company tries to create a flow of fake sales transactions with conspiring parties by producing fake invoices.

The GST Intelligence has spotted yet another case of fraud related to the utilization and passing on of ineligible ITC, with bogus invoices. 

Sachin Bhoruka, Director/Partner in various firms such as Erman Metals, Pioneer Trading, Marshal Multiventures, etc, was arrested for availing ITC amounting to Rs 485.64 cr and passing on fictitious ITC amounting to Rs 485.55 cr. Thus, the total quantum of the fraud committed involved GST amounting to Rs 971.19 cr.

In a parallel investigation, another person Mahesh Kinger, authorised signatory of Blue Sea Commodities and Director of Theme Lights was also found engaged in the fraudulent availment and utilization, as well as passing on of ineligible ITC on the basis of bogus invoices issued and received without actual supply of any goods or services. These entities had availed ineligible ITC amounting to Rs 580.23 cr and had passed on ineligible ITC amounting to Rs 579.76 cr. The total quantum of the fraud committed involved a GST of nearly Rs 1,159.99 cr.

Further, the GST officers arrested Deepak Kumar Prajapati, Director of Udyog Kiran Ltd. due to a similar fraud. The subsequent investigations revealed that Prajapati had set up an intricate web of over 22 firms that indulged in circular trading for the purpose of artificially inflating their turnover so as to avail higher bank loans and credit facilities. Based on the investigation conducted till date, it has been noticed that the firms operating Prajapati had passed on bogus ITC amounting to nearly Rs 126 cr, and have availed ITC amounting to R. 94 cr taking the total fraud amount to Rs. 220 cr.