One held over fraudulent claim of input tax credit worth Rs 25 crore through fake firms

The fraud came to light after CGST’s Palghar commissionerate initiated a probe against a certain Hacnup Trading (OPC) Private Limited and found it to be non-existent, he said.

Palghar: The Central GST authorities have busted a racket here that was used to fraudulently claim input tax credit (ITC) worth about Rs 25 crore with the help of fake companies and bogus invoices, an official said on Friday.

The fraud came to light after CGST’s Palghar commissionerate (Mumbai zone) in Maharashtra initiated a probe against a certain Hacnup Trading (OPC) Private Limited and found it to be non-existent, he said.

Company director Nilesh B Shah told authorities that he had created it and many other bogus firms for GST (Goods and Services Tax) frauds on the instructions of Kiran Kantharia and Manish Shah.

It was found that the fake firms created by Kantharia had passed on “ineligible ITC of Rs 11.02 crore and availed ITC of Rs 14.7 crore” using bogus invoices without the supply of goods or services.

Input tax credit is the GST paid by a registered person or company on the purchase of goods or services that are used as inputs in the business. ITC can be reduced from the GST payable on sales by the entity after fulfilling certain conditions.

Based on the evidence gathered during the investigation, Kantharia was arrested under the CGST Act, the official said.