Man creates 36 fake GST firms, arrested for input tax credit fraud of Rs 23 cr

A man was arrested in Mumbai on Friday for allegedly creating a web of 36 fake GST firms through which he generated fake invoices of Rs 132 crore and availed or passed on fake Input Tax Credit (ITC) of Rs 23 crore, Central Goods and Services Tax (CGST) officials said. The accused, Hasmukh Patel, has been sent to judicial custody till September 23, they added.

The anti-evasion wing of the CGST Commsissionerate in Bhiwandi was investigating various fake firms by the name of M/s Mectech Steel Trading Pvt Ltd, M/s UGSK Trader, M/s World Enterprises, M/s Rolex Enterprises, M/s HHT Enterprises and M/s Yesh Enterprises and established various direct and indirect links between these firms and Patel, officials revealed.

Based on specific intelligence, officials of the anti-evasion wing conducted a search at the residential premises of the accused who is wanted in eight ongoing cases for his alleged role in the GST fraud. Sumit Kumar, commissioner of CGST, Bhiwandi, said, “A probe revealed that the accused (Patel) allegedly created a web of these fake firms, through which they generated fake invoices of Rs 132 crore and availed/passed on fake ITC of Rs 23.16 crore without supplying any goods or services.”

Further, the accused confessed that he floated 36 fake GST firms and established a network to pass on fake input tax credit across various GST commissionerates, officials said. Based on material evidence gathered during the investigation, the accused was arrested on September 9 under section 69 of the CGST Act, 2017 for contravention of section 132 of the CGST Act, 2017.
The Bhiwandi commissionerate has arrested 17 people in the last one year as part of a special drive against tax fraudsters and fake ITC networks, officials said.