Rakesh Ganpat Rathod, proprietor of Krishna Machine Tools and a partner at R.R. Enterprises, was arrested in Bhavnagar for fraudulently claiming over Rs4.2 crore in Input Tax Credit (ITC) using bogus invoices.
The arrest follows a similar Rs 8 crore fake ITC scam in Alang just days earlier. The Bhavnagar Central GST Department uncovered that Rathod had set up a scheme to issue fake bills to multiple suppliers in return for a 4% commission.
According to GST officials, Rathod admitted during interrogation that funds were briefly deposited into his firm’s accounts to mimic legitimate trade. The cash was then withdrawn, commission deducted, and the balance returned to middlemen. A chartered accountant allegedly assisted by creating fake accounts and filing fraudulent GST returns, charging 0.5% per transaction.
The CGST Department suspects the involvement of a broader network, including a chartered accountant, local Shroffs (money handlers), Angadiya firms (informal couriers), and a key middleman. Investigations into their roles are underway.
In a parallel case, Chandrabhan Maurya, owner of M/s Ruchi Steel in Alang, was recently jailed for availing fake ITC worth over Rs8 crore.
The GST Department has initiated the cancellation of registrations for M/s Krishna Machine Tools and M/s R.R. Enterprises. Officials emphasize that these fraudulent activities damage revenue collection and distort market integrity.
Recent crackdowns have exposed similar frauds in Ahmedabad, Surat, Rajkot, Vadodara, and Bhavnagar. Shell firms, forged invoices, and collusion among professionals are common tactics. Over Rs500 crore in fake ITC claims have been identified in Gujarat over the past two years.
To combat rising GST fraud, enforcement agencies are ramping up surveillance, using data analytics and AI-based tools to detect red flags. More arrests are expected as the investigation deepens.
