During the search, authorities recovered Rs. 1.64 crore in cash and 400 grams of gold biscuits.
RAIPUR (Chhattisgarh): The Chhattisgarh State GST Department has unearthed a massive tax fraud involving more than 170 bogus firms. Acting on intelligence gathered through the GST Analytics and Intelligence Network and the GST Prime Portal, officials uncovered a sophisticated syndicate led by Mohammad Farhan Sorathia, a tax consultant by profession.
Authorities estimate that the scam caused the state to lose hundreds of crores in tax revenue every month.
Investigation and Modus Operandi
The departmentโs Business Intelligence Unit (BIU) had been investigating the racket for nearly a month. On September 12, officials raided Sorathiaโs office. The probe revealed evidence of 172 fake firms, registered solely to issue fraudulent bills and evade Goods and Services Tax (GST).
Farhan had engaged five office staff members to handle registrations, file GST returns, and generate e-way bills. Investigators also seized proof of forged documents, including fake rental agreements, consent letters, and affidavits used for company registrations.
Massive Tax Loss Through Fake Billing
Data revealed shocking discrepancies. From just 26 of the bogus firms, e-way bills worth Rs. 822 crore were generated, while the declared turnover in GST returns was only Rs. 106 crore. Preliminary estimates suggest that the state suffered a direct GST loss of nearly Rs. 100 crore from these firms alone.
The network extended beyond Chhattisgarh. Fake registrations were also traced to Punjab, Assam, Manipur, and Odisha, where forged tenancy and consent documents were submitted to authorities.
Cash and Gold Seized in Raids
On September 17, officials conducted a follow-up raid at the residence of Sorathiaโs uncle, Mohammad Abdul Latif Sorathia, after receiving intelligence that incriminating documents and money had been hidden there.
During the search, authorities recovered Rs. 1.64 crore in cash and 400 grams of gold biscuits. The seized assets were handed over to the Income Tax Department for further action.
Wider Network Under Scanner
The investigation has widened to include brokers, scrap dealers, and companies suspected of illegally availing Input Tax Credit (ITC) through the bogus firms. Officials believe the syndicate created a parallel ecosystem of fraudulent supply chains, manipulating tax credits and evading liabilities at scale.
Senior GST officials confirmed that calculations of the total fraud amount are ongoing. Early figures indicate the scam could run into several hundred crores.
Legal Action Underway
The State GST Department is continuing its probe and preparing for strict legal action. The racket is likely to trigger a series of prosecutions, with multiple agencies including the Income Tax Department and enforcement authorities expected to coordinate.
A senior GST officer stated: โThis is one of the largest cases of GST fraud detected in the state. The evidence points to a well-organized network operating across several states. Legal proceedings are being expedited to ensure recovery and accountability.โ
Key Highlights
- Mastermind Identified: Mohammad Farhan Sorathia, a tax consultant.
- Fake Firms: Over 170 bogus registrations uncovered.
- Fraudulent Billing: 26 firms alone generated e-way bills worth Rs. 822 crore.
- Tax Loss: At least Rs. 100 crore in GST losses from initial findings.
- Seizures: Rs. 1.64 crore cash and 400 grams of gold confiscated.
- Network Spread: Fraudulent firms registered in Punjab, Assam, Manipur, and Odisha.
- Next Steps: Involvement of brokers, scrap dealers, and companies under scrutiny.
Table 1: Fake Firms and Billing Discrepancies
| Particulars | Number / Amount | Remarks |
|---|---|---|
| Total bogus firms detected | 172 | Registered with fake documents |
| Firms analyzed in detail | 26 | Core sample under probe |
| E-way bills generated | Rs. 822 crore | Fake transactions |
| Turnover shown in returns | Rs. 106 crore | Gross underreporting |
| Estimated GST loss | Rs. 100 crore | From just 26 firms |
Table 2: Seized Assets
| Item | Quantity / Value | Location Found |
|---|---|---|
| Cash | Rs. 1.64 crore | Residence of Mohd. Abdul Latif Sorathia |
| Gold | 400 grams (4 biscuits) | Same location |
| Documents | Registration papers, affidavits, rental agreements | Offices of Mohd. Farhan Sorathia |
Table 3: Syndicate Structure and Reach
| Aspect | Details | Impact |
|---|---|---|
| Mastermind | Mohd. Farhan Sorathia (Tax Consultant) | Designed fake firm network |
| Staff involved | 5 office employees | Managed registrations, e-way bills, returns |
| Geographic spread | Chhattisgarh, Punjab, Assam, Manipur, Odisha | Multi-state operations |
| Entities under probe | Brokers, scrap dealers, companies availing ITC | Beneficiaries of fraud |
| Agencies engaged | State GST, Income Tax Department | Coordinated investigation |
(India CSR)
