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Workers-as-directors GST scam: Cover-up is no more an option

Updated on: 10 October,2023 07:42 AM IST  |  Mumbai
Anurag Kamble |

Following this paper’s front-page exposé about how government was robbed of Rs 150-crore, ACB steps in

Workers-as-directors GST scam: Cover-up is no more an option

The Goods and Services Tax Bhavan in Mazagaon. Pic/Ashish Raje

The Anti-Corruption Bureau (ACB) of Maharashtra has taken suo-motu cognisance of mid-day’s report about a R150 crore scam involving  Goods and Services Tax (GST) inspectors. The agency will seek a report on the internal probe carried out by the vigilance wing of GST in the matter to conduct investigations under the Prevention of Corruption Act. 

As per the report, the inspectors in question, Amit Lalge and Gajanan Lad, allegedly fraudulently cleared refunds for 40 shell companies run by 17 traders who had named contractual workers, porters, hotel waiters and drivers as their directors.

According to the government’s rules, the GST department should have immediately reported the fraud, which this newspaper brought to light on September 26, to the police.

Goods and Services Tax Bhavan in Mazagaon on September 25. Pic/Ashish RajeGoods and Services Tax Bhavan in Mazagaon on September 25. Pic/Ashish Raje

Vijay Patil, additional commissioner of the ACB, said, “After the mid-day report, we received one more complaint regarding the alleged fraud. We have taken cognisance of it. The ACB will seek a report from the GST vigilance wing.”

On the basis of the report and complaint, a proposal to initiate the inquiry into the matter was put up before the director general (DG) of the ACB. According to highly placed sources, the DG has directed to that officials seek an internal investigation report made by the vigilance wing in the matter.

The fraud was detected in 2022, following which the vigilance wing was roped in to carry out a detailed probe. Following in-depth investigations, one of the officers involved in the scam was busted a few months back. If sources are to be believed, the department has refrained from registering an FIR in the matter as several members of the top brass are involved.

According to the investigation, 16 traders from Ghatkopar and one from Kurla had been given non-refundable returns of more than R150 crore. The 16 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 and have an area of 200 to 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 under the leadership of the additional state tax commissioner, Thane region. The committee established that the 17 traders had made 40 refund applications for the financial year 2021-2022 valued at more than Rs 150 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 Lad.

As soon as the role of Lalge surfaced, he was suspended in May 2022, while Lad was suspended in June this year. Also, a proposal has been sent to the government by the GST department to conduct a departmental inquiry under Maharashtra Civil Services (Conduct and Appeal) Rules 1979.

“After going through the mid-day report, we also received a complaint from a private person demanding a probe into the matter. The complaint mentioned the report and asked what action had been taken by the ACB as the matter involves government officials and public money,” said an official from ACB.

“This necessitated an inquiry into the matter,” he added. 

Year fraud was detected

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