Rajasthan businessman arrested in Jamshedpur for ₹10 crore GST fraud

A nation-wide crackdown against tax evasion unearthed a series of inter-state fraudulent transactions based on fake invoices issued by fake companies to avail input tax credit benefits.

The Directorate of Goods and Services Tax Intelligence (DGGI) arrested a Rajasthan-based businessman on Tuesday for evading ₹10.50 crore in taxes after a nation-wide crackdown against tax evasion unearthed a series of inter-state fraudulent transactions based on fake invoices issued by fake companies to avail input tax credit (ITC) benefits.

The modus operandi was to generate and procure fake invoices without actual receipt or supply of goods or services and thereby facilitating and availing irregular ITC causing huge revenue loss to the government exchequer.(Getty Images/iStockphoto)

“We arrested Dinesh Vyas director of Shrimali Industries Pvt Ltd and proprietor of Vaibhav Enterprises and Shrinali Alloys under provisions of GST Act-2017 and remanded him to judicial custody here on Tuesday. He has been detected as the main person behind the entire conspiracy along with dew unidentified others at this point of time,” Dharamjit Kumar, joint director, DGGI-Jamshedpur, said.

“Their modus operandi was to generate and procure fake invoices without actual receipt or supply of goods or services and thereby facilitating and availing irregular ITC causing huge revenue loss to the government exchequer,” added Dharmajit Kumar.

Earlier on Monday, DGGI Jaipur zonal unit had busted a similar racket of generating fraudulent bills and invoices to claim ITC without depositing the actual GST amount with the government. The gang was also involved in generating GST registration number in names of dead people by using fake addresses.

Vyas came here on Tuesday after being summoned by DGGI following which he was arrested and produced in the special court of Judge YC Verma which sent him to judicial custody. DGGI officials said they would take Vyas on remand soon for further investigation.

Vyas denied the charges and told the media that he has been trapped. “I was not aware that the invoices were fake. I am the actual victim. I will fully cooperate with the investigating agency,” he said.

“Preliminary investigation has revealed that Shrinali Industries (Jodhpur and Gandhidham), Vaibahv Enterprises (Jodhpur) and Shrinali Alloys (Gandhidham) received fake invoices from Sidhi Vinayak Metal and Salt Pvt Ltd (Bokaro) and Ridhi Sidhi Enterprises (Jaipur) without actually receiving any goods or services from them. The said three companies also claimed ITC worth over ₹10 crore on the basis of such fake invoices from these two companies located in Boakro and Jaipur,” a senior DGGI official said on condition of anonymity.

DGGI additional director general (ADG, Jaipur) Rajendra Kumar had told the media in Jaipur on Monday that a total GST evasion of ₹58 crore under section 132(1) of the CGST Act, 2017, has been detected so far and three people have been arrested and sent to judicial custody until June 2.

The Jaipur racket was busted after simultaneous search operations at 21 business and residential establishments in Rajasthan, Madhya Pradesh, Uttar Pradesh and Delhi on May 18. Other documents that were seized revealed that Ghaziabad-based mastermind Sandeep Kumar Agrawal was operating 67 shell firms in the name of his neighbours and employees.