The Directorate General of GST Intelligence (DGGI), Belagavi Zonal Unit, has detected a massive GST evasion of Rs 21.64 crore involving a scrap trading firm operating in Harihar, Davanagere district of Karnataka.
According to a statement issued by the DGGI, the firm allegedly issued fake invoices worth Rs 112 crore, resulting in the fraudulent availment and utilisation of ITC of Rs 17.14 crore.
During the inspection, Mohammad Saqlain, identified as the person in charge of the firm's operations, was confronted with documentary evidence gathered by the department. He reportedly admitted to availing ITC based on fake bills and also accepted short payment of GST under the Reverse Charge Mechanism (RCM) amounting to Rs 4.50 crore, taking the total tax evasion figure to Rs 21.64 crore.
Fake Invoices and Bogus Suppliers Uncovered
The investigation revealed that the taxpayer procured metal scrap from unregistered suppliers, where ITC claims are not permitted under GST law. Purchases from registered suppliers were found to be from non-existent or fictitious firms, with the firm allegedly layering genuine transactions with fake invoices to fraudulently pass on ineligible ITC and evade taxes.
DGGI officials also discovered forged documents and fake GST registrations used to issue bogus invoices for commission purposes, indicating a well-organized evasion network.
Following the discovery, Saqlain was arrested on Friday under Section 69 of the Central Goods and Services Tax (CGST) Act, 2017, and produced before the Judicial Magistrate First Class (JMFC) Court, which remanded him to 14 days of judicial custody.
The DGGI confirmed that further investigation is in progress to identify other individuals and entities involved in the racket.
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