The first arrests under the Goods and Services Tax regime have been made. Under the Central GST, the directors of two companies have been arrested for allegedly availing the tax credit in a deceitful manner. Mr. Sanjiv Pravin Mehta who is the director of Shah Brothers Ispat Pvt Ltd and Vinaykumar D Arya who is the director of VN industries have both been arrested by the CGST Mumbai Central Commissionerate due to them availing ‘ineligible credit’ of Rs. 5.20 Crore and Rs. 2.03 Crore as was stated by the Commissionerate in his statement.
This suspected offence committed by the Shah Brothers Ispat cannot even get them any bail while the one committed by the VN industries is bailable since the amount of the fraud is below Rs. 5 Crore. It was also stated in the statement that a similar fraud had been committed in numerous other companies. The companies were exchanging invoices only for the so-called sale and purchase. It was also mentioned in the statement that there was movement of only paper and invoice but there no actual sell or purchase of any goods. After further investigation it came into notice that all these exchanges were done with a malafide intention in order to defraud the exchequer by opening the letter of credit on the transactions of fake purchases as was mentioned in the statement.