GST Crackdown: Two Arrested in Rs. 37.96-Crore Tax Fraud Cases

Central GST authorities have arrested two people in separate cases involving alleged tax evasion and fraudulent input tax credit (ITC) claims, with the combined value of the irregularities running into over Rs. 37 crore.

In the first case, officials of the Ranga Reddy CGST Commissionerate arrested D. Ravi Kishore, proprietor of Sri Tirumala Services in Palvancha, Bhadradri Kothagudem district, for allegedly evading Rs. 5.68 crore in GST. He was arrested on September 24 and produced before a court, which remanded him to 14 days in judicial custody.

Acting on specific information, CGST officials searched the firm's premises and Kishore's residence. The investigation allegedly found that the firm had fraudulently obtained GST registration by claiming to be a Special Economic Zone (SEZ) unit, despite not being eligible for the status.

Officials said the firm used the purported SEZ status to procure goods under zero-rated supplies without paying GST. The Letter of Approval submitted as proof of its SEZ status was allegedly found to be fake and fabricated. Preliminary calculations indicate that GST amounting to Rs. 5.68 crore was evaded on taxable supplies worth around Rs. 30 crore.

In the second case, the CGST Secunderabad Commissionerate's Anti-Evasion wing arrested a Mushirabad-based company director in an alleged Rs. 32.28-crore ITC fraud.

The company, which deals in TMT bars, steel pipes and tubes, allegedly claimed ITC using invoices issued by non-existent, inactive or deregistered firms. Field verification reportedly established that the suppliers were bogus entities and had no genuine business activity at their registered addresses.

Investigators also found that the company allegedly claimed credit without actually receiving the goods and subsequently used the ITC to settle GST liabilities. The director was arrested on September 24 under Section 69 of the CGST Act, 2017, and remanded to 14 days in judicial custody.

Officials said investigations in both cases are continuing, with further action and prosecution possible under the law.