First arrests for fraud made under GST Act


In a first in the country, the Central Goods and Service Tax (CGST) department arrested two Mumbai-based dealers in two separate cases under the CGST Act for allegedly defrauding the exchequer and banks by showing fake transactions.

The dealers have been identified as Sanjiv Mehta, director, Shah Brothers Ispat Private Limited at Trust House in Parel, and Vinaykumar D Arya, director of M/s VN industries at Darukhana in Sewri.

Mehta and Arya have been arrested by CGST Mumbai Central Commissionerate for availing ineligible credit of Rs 5.20 crore and Rs 2.03 crore, respectively. The officials claimed that the duo was only exchanging invoices for the sale and purchases, but actual goods were not being bought or sold, and no physical transport of goods was taking place.

“Prima facie, the investigations revealed that this was being done with mala fide intentions to defraud the exchequer and banks by opening letters of credit (LCs) on fake purchase transactions,” said a CGST official.

The official said, “The law is very clear that whoever commits the offence of issuing any invoice or bill without supply of goods or services or both in violation of the provisions of the CGST Act, or the rules made thereunder leading to wrongful utilization of input tax credit or refund of taxes, or using such invoices or bills, may be arrested. Our probe is still going in.”

This is the first arrest in India after GST implementation for fraud under CGST Act. It has been approved by Commissioner KN Raghavan, Mumbai Central, and executed by additional commissioner Manpreet Arora, assistant commissioner Anand Gokhle and superintendent Sh Parecha.

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