The Maharashtra Goods and Services Tax (MGST) department has arrested Salman Jamal Shah, the operator of a Kurla-based company that turned out to be bogus, for masterminding a fraudulent tax scheme. Shah allegedly exploited Aadhaar and PAN cards — originally obtained for loan purposes — to create a fake company and claim illicit input tax credits (ITC) worth Rs 18.96 crore.
This scheme led to a significant loss to the government exchequer, shedding light on the increasing vulnerability of tax systems to sophisticated corporate fraud. Shah, a resident of Jogeshwari West, was allegedly operating M/s Rynasty Trading Private Limited, a company shown to be engaged in the trading of aluminium scrap. The company, registered for GST in November 2021, had allegedly shown transactions worth Rs 79 crore with seven non-genuine taxpayer suppliers (NGTPs), claiming R18.96 crore in ITC on paper invoices.
“No goods ever changed hands — only documents did. This is a textbook case of bill trading without business,” an investigator said. The MGST department received specific intelligence that M/s Rynasty Trading Pvt Ltd, operating from Mumbai, was allegedly involved in claiming and utilising ineligible ITC of R18.96 crore by generating invoices from NGTPs.These invoices were raised without any actual supply of goods or services, and the tax amounts were passed on through paper transactions.
Following this, MGST officials contacted company directors Alauddin Gulam Rabbani Ansari and Sultan Ali Mehboob Sayyed. Both stated that they did not operate the company and that they had given their PAN and Aadhaar cards to a person named Zuber Payak, expressing suspicion that their documents had been misused. During questioning, Payak admitted to having collected the documents of Ansari and Sayyed for loan purposes, which he later handed over to Shah, who allegedly used them to float the bogus company.
When officials examined the company’s records, it was found that no genuine business transactions or supply of goods had taken place, indicating that the documents were fabricated to fraudulently avail themselves of tax credits. An MGST officer confirmed that Shah was, in fact, operating M/s Rynasty Trading Pvt Ltd, and following this discovery, the department recently arrested him.
What are input tax credits?
They allow taxpayers to claim credit for the taxes paid on purchases. However, issuing invoices or bills without any actual supply of goods or services and claiming ITC on such invoices is a cognisable and non-bailable offence under the GST Act.
