Mumbai: GST inspector and 16 traders booked for fraud

Internal probe finds officer colluded with the traders, cleared bogus applications for monetary gain

Five months after mid-day reported a suspected Goods and Services Tax (GST) fraud amounting to Rs 150 crore, the Anti-Corruption Bureau (ACB) has filed an FIR against a state GST inspector and 16 traders. It has also come to light the value of the scam exceeds Rs 175 crore. The ACB acted upon mid-day's reports in September 2023 and October 2023, initiating its probe. Following a vigilance probe by the state GST department, an FIR has been registered against state GST inspector Amit Lalge, 44, and 16 traders suspected of colluding with him.

In its statement, the ACB announced that the FIR has been filed against Lalhe and the traders under various sections of the Indian Penal Code, including criminal conspiracy, criminal breach of trust, cheating, and relevant sections of the Prevention of Corruption Act. “An FIR has been lodged and we are now conducting further investigations to trace the money trail,” said Vijay Patil, additional commissioner, ACB.

In a statement, the ACB revealed that the scam occurred between August 2021 and March 2022 while Lalge was posted as sales tax officer at the state GST Ghatkopar division. During his tenure, 16 traders submitted fake documents to obtain GSTN numbers. Despite not remitting any GST to the state government, they filed 39 applications claiming GST refunds amounting to Rs 175,93,12,622 in total.

“Despite indications in the GST BO (back office) Portal that the taxpayers were fake, he (Lalge) didn’t verify their authenticity. Further, instead of rejecting the applications, he accepted them and hence he colluded with the traders, misusing his position and causing a loss of Rs 175,93,12,622 to the state government,”the ACB said in a statement.

According to sources, the vigilance report submitted by the state GST department to the ACB showed several lapses on the part of Lalge, indicating that he blatantly abused his position. Sources within the ACB informed mid-day that as a Class-II officer, Lalge was not authorised to clear return files exceeding R5 lakh. However, he disregarded the protocol and approved return files surpassing the limit. Additionally, when companies submitted foreign export details, he was required to verify them by visiting the company's official address, which he failed to do.

“There is clear collusion, and we suspect that substantial kickbacks were paid to him and others. Currently, we are tracing the money trail before making any arrests in the case,” said an officer. The ACB is also probing why the probe was initially not reported as per the rules and came to light only after the mid-day reports. As per the government rule, the GST department should have immediately reported the fraud—which mid-day brought to light on September 26—to the police.

The fraud was detected in 2022, following which the vigilance wing was roped in to carry out a detailed probe. However, sources revealed that the department had refrained from registering an FIR in the matter as several members of the top brass were also suspected to be involved.

As per the investigation, 16 traders from Ghatkopar and one from Kurla had been given non-refundable returns amounting to more than R175 crore. The 16 traders have registration certificates attributed to only three addresses in Ghatkopar and all the addresses mentioned by the traders were of shops that they had rented, having an area of 200-300 square feet.

The shop owners were fictitious and documents were forged. After getting notified by the higher-ups, on April 6, 2022, the state tax commissioner formed an investigation committee headed by the additional state tax commissioner, Thane region. The committee established that the 16 traders had made 39 refund applications for the financial year 2021-2022, valued at more than R175 crore. The applications were made under the category titled ‘exports of goods without payment of tax and Inverted tax structures’.

The investigation revealed that all the cases involving the traders from Ghatkopar had been assigned to Lalge, who processed the applications made to the GST office and sanctioned the refunds. The application of the Kurla-based trader had been processed by another officer who is currently not named in the FIR. As soon as the role of Lalge surfaced, he was suspended in May 2022, while the other officer in question was suspended in June 2023.

39
No of bogus applications cleared

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