Mumbai: Scam that robbed govt’s GST dept of Rs 150+ cr busted

Goods and Services Tax Bhavan in Mazagaon on Monday. Pic/Ashish Raje

The vigilance wing of the state Goods and Services Tax (GST) department has unearthed a Rs 150-crore scam involving 17 traders and two Mumbai-based tax officers. As per the investigation into the matter, the masterminds allegedly formed 40 shell companies and named contractual workers, porters, hotel waiters and drivers as their directors. Following an in-depth probe, one of the tax officials was suspended a few months ago. If sources are to be believed, several other top officials are involved. Vigilance officials have refrained from registering an FIR in the matter so far.

As per the report, the fraud was detected in 2022, following which the vigilance wing was roped in to carry out a detailed probe. Preliminary investigations into the case revealed that the masterminds of the scam formed around 40 shell companies while 16 traders from Ghatkopar and one from Kurla were given non-refundable returns of more than Rs 150 crore.

Goods and Services Tax Bhavan in Mazgaon on Monday. Pic/Ashish Raje

"These 16 traders have registration certificates that mention only three addresses in Ghatkopar and all the addresses were of shops that were rented out and have an area of just 200 to 300 square feet," said an official. "The shocking part is the shop owners were fictitious and documents were forged. Also, the directors of these 17 companies were workers, porters, hotel waiters and drivers by profession," he added.

After being notified by the higher-ups, on April 6, 2022, the state tax commissioner formed an investigation committee under the leadership of the additional state tax commissioner, Thane region. The committee established that 17 traders who were registered under GST, made 40 refund applications for the financial year 2021-2022 valued at more than Rs 150 crore. The applications were filed under the category ‘Exports of goods without payment of tax and Inverted tax structures'.

According to sources, the department is dragging its feet as more top officials are involved in the fraud of issuing refunds. The investigation revealed that all the cases of the traders from Ghatkopar were assigned to state tax officer Amit Lalge. He processed the applications made to the GST office and sanctioned the refunds. Also, one application of the Kurla-based trader was processed by officer Gajanan Lad.

Also read: Maharashtra: Man held from Punjab for 1994 Navi Mumbai murder

"As soon as the role of Lalge surfaced, he was suspended in May 2022, while Lad was suspended in June this year, also a proposal has been sent to the government to conduct a departmental inquiry under Maharashtra Civil Services (Conduct and Appeal) Rules 1979," the official said.

A senior GST official told mid-day that the process to verify the actual refund value is being determined on the basis of the documents available and all the traders have been issued show-cause notices. "A reassessment is being carried out to ascertain the value of dubious refund. After establishing this, the recovery of the amount will be initiated," he added.

As per the sources, Lalge had confessed during the internal investigation to accepting some kickbacks from traders but the nature of his dealings is unclear. Also, he had hinted about the involvement of the senior ups in the matter which allegedly resulted in the attempts to hush up the matter.

As per the Departmental Inquiry Rules, if any government official is found to be responsible for the loss of revenue, they shall face criminal action and an FIR must be registered against them in the local police station concerned. But in this case, no FIR has been filed against the officers. In previous such incidents, GST offices have been prompt about booking such fraudsters when their office was not involved. Attempts to meet the special commissioner of state tax failed as he replied he was unavailable to meet this reporter.

2022
Year fraud was detected

17
No of traders involved in scam