In a major crackdown on tax evasion and fraudulent billing practices, the State Goods and Services Tax (SGST) Department in Gujarat has uncovered an alleged fake Input Tax Credit (ITC) fraud worth approximately ₹23.08 crore in Jamnagar. Two individuals—a businessman and his father—have been arrested in connection with the case. Authorities allege that the accused orchestrated a scheme involving fictitious invoices and non-existent business transactions to unlawfully claim substantial tax benefits. The development has drawn significant attention across the city’s industrial and business communities.
According to officials, SGST investigators conducted a search operation at a trading firm located in Dared GIDC Phase-III, one of Jamnagar’s prominent industrial zones. During the operation, officers examined financial records, tax documents, and transaction details that allegedly revealed large-scale irregularities. Based on the findings, the firm’s proprietor, Ayush Sureshchandra Shah, and his father, Sureshchandra Mulchandra Shah, were taken into custody.
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Investigators claim that the accused used a network of bogus invoices to generate and avail fraudulent Input Tax Credit without any actual supply, movement, or purchase of goods. Preliminary findings suggest that several transactions recorded in company documents existed only on paper and lacked supporting evidence of genuine commercial activity. Authorities believe the invoices were created primarily to obtain tax credits that were not legally admissible under GST regulations.
The SGST Department estimates that the alleged scheme resulted in the generation and utilization of fake ITC amounting to approximately ₹23.08 crore. Officials say such practices not only violate tax laws but also cause substantial losses to government revenue. Tax authorities have repeatedly warned that fraudulent ITC claims undermine the integrity of the GST framework and create an unfair advantage for businesses engaged in illegal practices.
According to investigators, fake ITC operations often involve multiple firms, shell entities, and interconnected transactions designed to create the appearance of legitimate trade. In many cases, companies issue invoices without supplying any goods, enabling recipients to claim tax credits on transactions that never actually occurred. Authorities are now examining whether additional entities, intermediaries, or business associates may have played a role in the alleged fraud.
Following the detection of the suspected irregularities, SGST officials initiated legal proceedings and launched a broader investigation into the financial activities of the firm. Investigators are scrutinising bank accounts, GST returns, financial statements, and transaction records to determine the full scale of the alleged fraud. They are also assessing whether similar billing patterns were used with other companies operating within or outside Gujarat.
The case has generated concern among traders and industrialists in the Dared GIDC area, where many businesses are closely following developments. Industry representatives have emphasized the need for stronger compliance mechanisms and greater vigilance to ensure that genuine enterprises are not affected by the actions of a few violators. Business groups have also highlighted the importance of maintaining trust in the GST system through strict enforcement against fraudulent practices.
Tax experts note that investigations involving fake ITC claims rarely remain limited to a single company. Once authorities identify suspicious invoice chains, they typically examine associated buyers, suppliers, transport records, banking channels, and tax filings. As a result, the probe could potentially expand if investigators uncover links to a broader network of entities involved in similar activities.
Officials have indicated that the investigation remains at a preliminary stage and that extensive analysis of digital records and financial documents is ongoing. The SGST Department is attempting to trace the complete network behind the alleged fraudulent invoicing and determine the extent of revenue loss caused to the state exchequer. Authorities have stated that if additional individuals or organisations are found to be involved, further legal action will follow.
For now, the alleged ₹23 crore fake ITC fraud has emerged as one of the most significant GST enforcement actions in the region, drawing attention from both tax authorities and the wider business community. The findings of the ongoing investigation are expected to determine whether the case is part of a larger pattern of organised tax evasion.
