Meghalaya govt probing fake firms linked to Rs 500 cr GST fraud, says minister

Shillong, Sep 11 (PTI) The Meghalaya government is investigating the operations of fake firms allegedly involved in passing on bogus Input Tax Credit (ITC) outside the state, Taxation Minister Abu Taher Mondal told the Assembly on Thursday.

He was replying to a Zero Hour notice moved by VPP legislator Ardent M Basaiawmoit on reports of a Rs 500 crore GST fraud linked to coke plants.

"I can assure the House that the state GST department is actively investigating fake firms operating within Meghalaya, which are engaged in passing on ITC to recipients located outside the state. A coordinated action is being taken against the fraudulent entities," Mondal said.

He said the GST department has also written to the Directorate General of GST Intelligence (DGGI) seeking details to initiate action against recipients of bogus ITC under Meghalaya's jurisdiction.

The minister said that cases flagged by the DGGI are regularly shared with state authorities, and action has been taken wherever such matters have been communicated.

Reports alleged that four persons - all residents of Assam - were arrested on August 20 in connection with a fake billing case.

Another accused, who is the owner of a coke plant in Byrnihat in Assam, was also arrested for allegedly evading GST of Rs 150-200 crore.

Mondal, however, said the DGGI has not disclosed details of which specific coke plants in Meghalaya might have benefited from such fraudulent schemes.

He pointed out that legally sourced coal in Meghalaya has been limited since the 2014 ban on rat-hole mining, forcing coke plants to depend on district auctioned coal and imports from outside the state.

The minister explained that while all inter-state coal purchases by Meghalaya coke plants are reflected on the GST portal with e-way bills, verifying the genuineness of such invoices remains a challenge, as state authorities cannot access returns of suppliers registered in other states.

"Fake invoices are typically issued to pass on bogus ITC. Such frauds can only be established if suppliers are non-existent, goods or services are not supplied, taxes are not paid as declared, or payment is made using bogus ITC," he said, adding that such investigations fall under the DGGI's jurisdiction.

According to GST records, between 2022-23 and 2024-25, 29 out of 54 registered coke plants in Meghalaya were operational.

Their combined turnover stood at Rs 307.06 crore with a total tax liability of Rs 18.75 crore, of which Rs 15.84 crore was discharged through ITC and the rest in cash.

During the same period, the plants purchased 1,48,134 MT of coal from outside the state worth Rs 72.49 crore, paying Rs 24.57 crore as IGST.

Mondal said the report did not clarify whether the fake billing was linked to the sale of coke or the purchase of coal, but indicated it was more likely connected to coal procurement by coke plants. PTI JOP NN