GST evasion racket busted in Chhattisgarh; 170 firms exposed, cash and gold seized

The Chhattisgarh State Goods and Services Tax (CG SGST) department has unearthed a major tax evasion racket involving more than 170 bogus firms, a government official said on Friday.

The racket allegedly masterminded by Mohmmad Farhan Sorathia, a GST tax consultant, caused the state exchequer losses running into several crore rupees every month by generating fake registrations, bills, and e-way bills, he said.

"Preliminary investigation suggested that just 26 of these fake firms generated e-way bills worth Rs 822 crore while reporting a turnover of only Rs 106 crore. Authorities estimate a preliminary GST revenue loss of around Rs 100 crore from these firms alone," a government statement said.

The syndicate was engaged in creating bogus firms and bills using the GST prime portal, it said, adding the CG SGST's Business Intelligence Unit (BIU) had been investigating the case for over a month.

"On September 12, a search was conducted at Sorathia's office, which revealed that 172 firms were allegedly floated using forged documents. Sorathia had reportedly employed five staff members to handle firm registrations, file returns, and generate e-way bills," it said.

Investigators have also found evidence of fabricated rent agreements, consent letters, and affidavits used to secure bogus GST registrations, the release added.

Documents also point to registrations not only within Chhattisgarh but also in Punjab, Assam, Manipur, and Odisha, it said.

Bogus documents, such as lease agreements and consent letters, were prepared for registration and these firms were also issuing bogus supply bills and e-way bills, the government statement said.

"As a part of its probe, the department searched the residence of Sorathia's uncle, Mohammad Abdul Latif Sorathia, on September 17 and seized Rs 1.64 crore cash and four gold biscuits weighing 400 grams. The seized assets were handed over to the Income Tax Department for further action," the release said.

The racket involved several brokers, scrap dealers, and companies benefiting from fraudulent Input Tax Credit claims, it said, adding that a comprehensive probe and further legal proceedings are underway into the matter