Mumbai SGST Busts ₹50 Crore GST Fake Invoice Scam, Two Directors Arrested

The State Goods and Services Tax (SGST) department in Mumbai has taken strong action against GST fraud by arresting two company directors in separate but similar cases. Both cases involve large-scale misuse of Input Tax Credit (ITC), with a combined tax evasion exceeding ₹50 crore.

These arrests are part of a wider crackdown to curb tax evasion, protect government revenue, and ensure fair competition for law-abiding businesses.

Case 1: Magic Gold Bullion Pvt Ltd — ₹30.5 Crore ITC Fraud

Accused: Yashwant Kumar Tailor, Director of Magic Gold Bullion Pvt Ltd

Period of Fraud: June 2020 – June 2025

What Happened:

The company allegedly availed fraudulent ITC worth ₹30.5 crore.

This was done by using invoices from fake or non-existent firms, without actually purchasing any goods or services.

Authorities found no business infrastructure — no proper office, no staff, and no resources to justify the company’s declared turnover.

SGST Findings:

Tailor did not appear before the SGST department despite repeated summons.

The transactions existed only on paper; in reality, no actual trade took place.

Case 2: RFIC Trading Pvt Ltd — ₹20.05 Crore GST Evasion

Accused: Om Jay Ramrakhiani, Director of RFIC Trading Pvt Ltd

Fraud Details:

The company was involved in a ₹20.05 crore GST evasion scheme.

It received ₹3.73 crore of ineligible ITC from Bharat Metal Corporation.

Bharat Metal Corporation itself was linked to several bogus suppliers whose GST registrations had already been cancelled.

SGST Investigation:

A search revealed that RFIC Trading’s registered office was actually a residential flat, with no business activity or records found on-site.

Transactions involved fake invoices and ITC adjustments without actual payment of money.

Why This Matters

GST fraud through fake invoices has become a major challenge for tax authorities. Fraudsters use shell companies or non-existent suppliers to claim tax credits they’re not entitled to. This results in:

Loss of government revenue

Unfair advantage for dishonest businesses over genuine taxpayers

Distortion in market competition

The SGST department’s swift arrests in these cases send a clear message: such activities will not be tolerated, and perpetrators will face strict legal action under GST laws.

Key Takeaway for Businesses

Maintain genuine transactions and documentation.

Avoid dealing with suppliers whose GST credentials are doubtful.

Verify GST numbers and supplier history before making purchases.

Non-compliance can lead not only to financial penalties but also to criminal prosecution.