Gujarat: ED files case in GST multi-crore scam; journalist grilled

The Enforcement Directorate (ED), which has joined the investigation into the multi-crore GST scam in Gujarat, has filed a case under the Prevention of Money Laundering Act (PMLA) on October 18.

This move comes a day after the central agency conducted raids at 23 locations across seven cities - Ahmedabad, Bhavnagar, Junagadh, Rajkot, Surat, Veraval and Kodina, including journalist Mahesh Langa's residence in Ahmedabad.

₹50,000 crore ITC fraud

The ED press release stated that the investigation so far indicates that this is a huge scam of ₹50,000 crore input tax credit (ITC) fraud by 220 firms.

"We found that PAN, mobile numbers and email IDs related to 34 GST registration numbers were used to create another 186 registrations. Out of these 50 firms have addresses in Gujarat. The primary accused entity/firm Dhruvi Enterprise of DA Enterprise was established using documents belonging to one Haresh Makwana, a daily wage labourer from Gadhada taluka in Bhavnagar, who is technically the owner of the firm,” it read.

“We have arrested Haresh Makwana from Bhavnagar as he is technically the owner of DA Enterprise, the firm at the center of the scam. He is a daily wage worker whose earning is about ₹300 to ₹350 per day. One of the accused, Aijaz Maldar who was also arrested from Bhavnagar, offered Makwana money in exchange for his documents. When Makwana wasn’t convinced, Maldar assured him that he will get a SIM card that will have cheaper calling rates that will reduce his mobile bills,” said Ajit Rajian, DCP of Ahmedabad Crime Branch and one of the investigating officers of the case.

Also read: Gujarat: ED raids journalist Mahesh Langa’s property, others in ‘GST fraud’ case 

Further, the ED press release said that it will take time to assess valuables and documents both digital and the paper trail. However, initial investigations suggest that this is a "multi-layered complex scam".

Big money trail

Elaborating on the modus operandi, the press release said that initially, one fake company – Dhruvi Enterprise, whose registration was cancelled, gave fake invoices to two actual registered companies of a certain amount of ITC without any transaction of goods or services. The two companies claimed the ITC and gave back its due commission to the primary fake company. The Dhruvi Enterprise in the process of the one year, created multiple fake companies with the same model of ITC and commission income.

"We are now dealing with multiple fake companies that claimed ITC where invoices don’t exist. This went on for a long time for the certain fake companies to stop filing their GSTR – 3B (A summary return form for the purpose of declaring GST liabilities for a particular tax period and discharge these liabilities) and GSTR -1 (form for monthly or quarterly statement of outward supplies to be furnished by all normal and casual registered taxpayers making outward supplies of goods and services or both and contains details of outward supplies of goods and services). This is a case of a big money trail,” read the ED release.

Also read: How pan-India probe led to uncovering of multi-crore GST scam in Gujarat

Journalist questioned

Meanwhile, in another development in the case, Gujarat-based journalist Mahesh Langa from The Hindu, who is to be produced in court on October 18, after his ten-day remand was interrogated by Ahmedabad police commissioner GS Mallik.

According to an Ahmedabad police official, who spoke to The Federal on condition of anonymity, “It was revealed that Mahesh Langa’s wife and cousin who are directors of Dhruvi enterprise are actually silent partners with no rights to undertake any transaction or bank accounts. Those were being handled by Langa himself and he was running the firm in the name of his wife and cousin. It was also revealed through Langa’s WhatsApp chats that there was a regular information trade-off between Langa and bureaucrats and businessmen. Prima facie, names of two IAS officers has come up who were in involved in the information trade off with the journalist."

The official also pointed out that this information doesn’t seem to have been passed on to his employer or used in his line of journalistic work. "We have not found any article that uses the said information,” added the official.

Also read: Gujarat: Journalist Mahesh Langa arrested in GST scam

The arrests

Noticeably, the case is already being investigated by DGGI and Ahmedabad Crime Branch. So far, eight people have been arrested by the state investigating agency. On October 8, the police arrested four accused – journalist Mahesh Langa of The Hindu, Aijaz Maldar, Abdulkader alias Bapu and Jyotish Magan Gondaliya, whose 10-day remand ends on October 18.

On October 13, Faizal Munaf Shaikh, resident of Bhavnagar and associated with Dhruvi Enterprises, Irfan alias Padu Sattar Jethwa, Jignesh Himmatlal Desai, resident of Bhavnagar and operator of the bank account of Dhruvi Enterprises and Paresh Pradeep Dodiya , a resident of Rajkot and owner of Prakash Industries were arrested and sent to five day remand that also ends on October 18.

The case came to light after DGGI wrote a formal complaint on October 5, after which the Crime Branch, and Special Operations group had conducted raids across seven districts, including at the Ahmedabad residence of journalist Mahesh Langa.

Langa who was later sent to ten-day police remand by a judicial magistrate court, had challenged his remand in the high court through his lawyer, advocate Jal Unwala.

Later on October 14, on the day of hearing, Unwala withdrew the petition without stating any particular reason.