Mumbai: On Tuesday, the Ahmedabad Police’s Crime Branch arrested 20 people, including a journalist working with a newspaper, in an alleged Goods and Services Tax (GST) fraud. The case involves a web of over 200 “fraudulently created firms”, fake bills, forged documents and misrepresented identities, an investigation by the Ahmedabad Directorate General of GST Intelligence has found.
Mahesh Langa, the journalist with The Hindu, was arrested following a detailed questioning in connection with the probe into an alleged scam done “in an organised manner to defraud the government exchequer by availing bogus input tax credit”.
In the FIR, 13 companies/entites are mentioned. Though Mahesh Langa is not mentioned in the FIR, a company where his family member is a partner has been named in the complaint.
“The central GST had found some suspicious transactions in bogus firms floated in the name of Mahesh Langa’s wife and father using forged documents. Langa has been arrested for further investigation,” Deputy Commissioner of Police (Crime) Ajit Rajian told the media Tuesday.
On Monday, the Crime Branch registered an FIR after getting a complaint from the Central GST related to bogus firms floated allegedly with an intent to defraud the government by availing bogus input tax credit through fraudulent transactions.
Following a complaint from the office of Directorate General of GST Intelligence (DGGI), Zonal Unit, Ahmedabad, raids and investigations were carried out across various locations, including in Ahmedabad, Junagadh, Surat, Kheda and Bhavnagar, in Gujarat by the state Economic Offences Wing.
“It appears that there is an involvement of over 200 fraudulently created firms working across the country in an organised manner to defraud the government exchequer by availing bogus input tax credit. Forged documents and identities were used for the creation of such firms for tax evasion,” the police said in a press note.
Some of the entities named as accused in the FIR include Dhruvi Enterprise, Om Construction, Raj Infra, Haresh Construction Company and DA Enterprise, and Arham Steel.
“It appears to be a large group working towards a criminal conspiracy for causing financial loss to the nation to the tune of revenue which may run into crores of rupees, by the way of using such fake billing, forged documents and malafide misrepresentation of facts/documents which needs to be investigated in detail,” the FIR says.
Suresh Nambath, Editor, The Hindu has put out a post on ‘X’ confirming that Langa was arrested by the Crime Branch on a complaint registered by the Central GST.
“While we have no details about the merits of the case, we are given to understand that this is not related to his reports published in The Hindu,” he posted Wednesday.
“We would like to state at this time that we appreciate his professional work for The Hindu as the Gujarat correspondent based in Ahmedabad. We do hope that no journalist anywhere is targeted for their work, and we expect the investigation to be conducted fairly and quickly,” Nambath added.
Langa’s family could not be reached for a comment.
What preliminary probe found
According to the complaint registered by the DGGI, Zonal Unit, Ahmedabad, Dhruvi Enterprise had allegedly obtained GST registration fraudulently, prima facie, on the basis of document—rent agreement dated 13 February 2023.
“This document appeared to be forged,” the complainant Himanshu Joshi, a senior intelligence officer in DGGI, writes. “Analysis of data also suggested that the unit appeared to be indulging in receipt and transfer of bogus Input Tax Credit of GST to unscrupulous recipients by issuance of fake invoices without the supply of underlying goods.”
The police were informed 3 October to check on the validity and authenticity of the document, the complaint says.
In response, the police informed the DGGI office the next day that the rent agreement was found to be forged. Probe further revealed that the company, Dhruvi Enterprise, did not ever exist at its registered place of business.
The same PAN number, the complainant alleges, was later used to create six firms.
“…common mobile numbers and email ids were used for registration of these firms, which themselves appeared to be involved in availment and passing of fraudulent ITC (Input Tax Credit) without any actual supply of corresponding goods,” the officer notes.
While it was found that the Dhruvi Enterprise allegedly filed GST for March and April 2023 only, it purportedly availed ITC only from Solanki Enterprises, which in turn got ITC from the supplier Nemis Traders. Later, GST registration of both these firms were cancelled.
ITC allows businesses to claim credit for the tax they’ve paid on their purchases. Through this mechanism, companies also avoid the “cascading effect” of taxes, where tax is charged on top of tax.
The complaint notes that Solanki Enterprises got ITC from the supplier Nemis Traders. Later, GST registration of both these firms were cancelled.
Investigation showed that Dhruvi Enterprise allegedly passed on the input tax credit to 12 more firms—Arham Steel, Om Construction, Shree Kankeshwari Enterprise, Raj Infra, Haresh Construction, Ethiraj Construction, D A Enterprise (Manojkumar Langa and Vinbhai Patel are proprietors in the firm), B J Odedra, R M Dasa Infrastructure, Aryan Associates, Pruthvi Builders, Paresh Pradipbhai Dodiya.
Dhruvi, Solanki, and Nemis allegedly availed excess tax credit in comparison to what they were legally eligible to, the officer mentions.
“Analysis of GSTR-2A returns of 12 active recipient firms of Dhruvi Enterprise, suggested further availment of suspicious inward ITC by these 12 recipient firms from other active GST registrations. It was also revealed that these 12 recipient firms of Dhruvi Enterprise had also availed ITC from cancelled firms after their cancellation as well,” the complaint note says.
Detailed examination of all these firms revealed that common email ids and mobile numbers were used, it adds.
The summary of analysis of common identifiers (Mobile No., Email Id and PAN Nos.) suggested that these common identifiers were primarily linked with creation/ registration of 34 GST registrations out of which 11 firms were registered in Gujarat, it says.
These firms were further involved in registration/creation of another 186 GST Registrations (50 registrations in Gujarat). And all these 36 primary and 186 additional registrations were cancelled, the officer adds.
Upon examination of Dhruvi Enterprise’s E-way bills, the DGGI found that 9 of those inward bills were such that no vehicle movement could be traced while 128 outward E-way bills were such that movement of vehicles could not be verified.
“…it appears that prima facie, there is involvement of over 220 fraudulently created firms/entities working across the country in an organised manner to defraud the Government Exchequer by availing and passing of bogus Input Tax Credit,” the DGGI officer writes in the concluding part of his complaint.
(Edited by Tony Rai)
The fact that this ‘journalist’ was using the sympathies for left liberal propoganda to further his aims will be suppressed. The media will scream that media and democracy is being attacked. New India is same as old India, just the protected classes have changed. The old protected classes were never really protected. The new ones can get away with theft and murder by claiming victimhood