The Gujarat State GST Department has busted a fake invoicing and input tax credit (ITC) fraud racket involving transactions worth over ₹128 crore, leading to the arrest of a father-son duo from Jamnagar in connection with tax evasion of more than ₹23 crore.
Acting on specific intelligence inputs, the department carried out coordinated search and seizure operations on June 16 across 22 firms spread over Jamnagar, Rajkot, Ahmedabad, Gandhinagar, Vadodara, Surat and Bhavnagar. The entities included M/s Mandovara Trading Co., among others. During the investigation, officials arrested Sureshchandra Moolchand Shah, proprietor of M/s Mandovara Trading Co., and his son, Ayush Sureshchandra Shah, for their alleged involvement in fraudulent ITC claims and tax evasion amounting to ₹23.08 crore.
Search operations across Gujarat expose multi-city shell firm network
According to the department, the firm engaged in large-scale tax evasion by booking bogus purchases of brass and copper scrap and claiming input tax credit for non-genuine transactions. Preliminary findings suggest that the entity recorded fabricated transactions exceeding ₹128 crore through shell firms, without any actual movement of goods, with the intent to defraud the exchequer.
Fake invoices and ITC misuse under GST Act provisions
The department stated that the wrongful availment of input tax credit constitutes an offence under Section 132(1)(c) of the GST Act, while issuance of fake invoices to pass on such credit falls under Section 132(1)(b) of the Act. Following the establishment of prima facie evidence, both accused were taken into custody to aid further investigation. Officials said the probe is ongoing and further instances of tax evasion and additional GST liabilities may emerge as scrutiny of linked entities continues. The department has indicated that it is pursuing strict legal action to safeguard and recover government revenue.
GST Department warns taxpayers against sharing sensitive financial data
The State GST Department has also urged taxpayers and citizens to remain vigilant against fraud and avoid sharing sensitive documents such as Aadhaar, PAN, GST registration details and bank account information with unknown or unauthorised persons, warning that misuse of such data can lead to financial fraud and identity theft.
