Kolhapur CGST arrests alleged mastermind of Rs 10.6 crore fake ITC racket

Kolhapur: The anti-evasion wing of the Central GST Commissionerate, Kolhapur, has arrested the alleged mastermind behind a Rs 10.6 crore fake input tax credit (ITC) fraud, marking the first arrest by the commissionerate in a GST evasion case.

Kalpesh Kumbhar, a 40-year-old resident of Ghudewadi in Kolhapur district, was arrested on Monday following an investigation into a network of shell firms allegedly used to generate and pass on fraudulent GST credits.The action was carried out under the directions of CGST Kolhapur commissioner Sumit Kumar Yadav and joint commissioner (anti-evasion) Rohit Joshi.The investigation began with scrutiny of M/s Rachana Agro Services/Nirmeeti Industries at Shiroli MIDC.

According to the CGST commissionerate, data analysis and physical verification uncovered a web of dummy entities created solely to defraud the govt exchequer.Investigators found that Kumbhar, proprietor of M/s Rachana Agro Services/Nirmeeti Industries and partner in M/s Nirmiti Casting Industries and M/s Mahalaxmi Cast Industries, allegedly used the identities of relatives and associates to float at least six shell companies.

These firms issued fake GST invoices among themselves and to other entities without any actual supply or movement of goods and services.The probe revealed that the six shell entities fraudulently passed on ITC worth Rs 10.6 crore to M/s Rachana Agro Services/Nirmeeti Industries. Of this, Rs 3.7 crore was allegedly used to offset the firm’s GST liabilities, while the remaining Rs 6.8 crore was passed on to downstream recipients through inadmissible credit.“Deep-dive data analysis and subsequent physical verifications revealed a web of shell and dummy entities established solely for the purpose of defrauding the government exchequer,” a press release from the commissionerate stated.The release also said documentary evidence and statements recorded under section 70 of the CGST Act established that no genuine business transactions or physical supplies had taken place.The alleged offences are punishable under sections 132(1)(b) and 132(1)(c) of the CGST Act. Since the amount involved exceeds Rs 5 crore, the case falls under section 132(1)(i), making it a cognisable and non-bailable offence under section 132(5) of the Act.Kumbhar was produced before a court in Kolhapur, which remanded him in 11 days of judicial custody. Further investigations are underway to identify downstream beneficiaries and other possible conspirators linked to the network.The investigation team comprised assistant commissioner Ram Shankar Meena, superintendents Gautam Kumar, Swapnil Vagare, Abhishek Ranjan and Mayur Shinde, along with inspector Ajit Borage Hawaldar.