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Gujarat businessman defrauds Govt in multi-crore GST scam

Financial records, bank statements, and details from various government departments indicate that the total amount of tax collected but not paid to the government is around Rs. 6.74 crores for the period from 2017-18 to 2023-24.

News Arena Network - Ahmedabad - UPDATED: July 5, 2024, 11:29 PM - 3 mins read

Gujarat businessman defrauds Govt in multi-crore GST scam


In a significant uncovering of GST fraud, businessman Virbhadrasinh Chauhan of Gujarat has been found guilty of defrauding the government for several years through a sophisticated scheme. Chauhan, director of M/s Xerxes HR Services Private Limited, collected GST from various government bodies but failed to deposit the amount to the GST department.

 

Chauhan exploited a loophole in the GST taxation system, identifying that the firms he billed did not claim credits on GST for the services they purchased. This allowed him to amass a substantial fortune over more than five years, highlighting the need for further reforms in the GST system.

 

The Central GST Gandhinagar Commissionerate discovered the fraud through specific intelligence. It was revealed that Xerxes HR Services, engaged in providing manpower services primarily to government bodies like the Gujarat Pollution Control Board and Gujarat State Seeds Corporation Limited, did not pay GST despite collecting it from its clients.

 

Investigations showed that even after the GST registration of Xerxes HR Services was cancelled for the non-filing of returns, the firm continued to issue taxable invoices quoting the cancelled registration number and collecting GST at 18%. The firm neither filed GST returns nor deposited the collected GST with the government.

 

Financial records, bank statements, and details from various government departments indicate that the total amount of tax collected but not paid to the government is around Rs. 6.74 crores for the period from 2017-18 to 2023-24.

 

Upon confrontation with the evidence, Chauhan admitted to collecting but not paying GST amounting to Rs. 6.74 crores. The CGST officers arrested him on July 4, 2024, under Section 69 of the CGST Act, 2017, for committing an offence under Section 132(1)(d) of the CGST Act, 2017, which is punishable with imprisonment of up to five years.

 

Following his arrest, Chauhan was medically examined and presented before the Additional Chief Metropolitan Magistrate in Ahmedabad, who remanded him to judicial custody for 15 days.

 

This case marks a major detection of tax non-payment by a taxpayer who collected but did not remit taxes to the government. The investigation was the result of specific intelligence data refined through rigorous analysis of information available on the GST Network and gathered during the investigation.

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