KOHIMA: The arrest of a coal mining executive in Nagaland has drawn attention to the mechanics of a ₹53.28-crore GST fraud, exposing how paper transactions, dormant firms and fabricated invoices can be used to siphon public revenue without any movement of goods.
An Arrest in Dimapur
On a January morning in Kohima, officials from the Central Goods and Services Tax (CGST) Anti-Evasion Unit in Dimapur confirmed the arrest of Atiqur Rahman Barbhuiya, a director of two coal mining companies operating in Nagaland. The arrest followed an investigation into what authorities described as a large-scale GST fraud involving fake invoices and the fraudulent availing of input tax credit (ITC).
Barbhuiya, who is listed as a director of Bendangtoshi Mining Pvt Ltd and Kevitho Mining Pvt Ltd, was taken into custody on Saturday. Officials said the alleged fraud amounted to ₹53.28 crore, a figure derived from the combined ITC claimed by the two firms. According to the CGST department, the case centers on invoices raised without any actual supply of goods transactions that existed on paper but not in physical or commercial reality.
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The arrest was made under Sections 132(1)(b) and 132(1)(c) of the CGST Act, 2017, which deal with the issuance of invoices without supply of goods or services and the wrongful availment of ITC. These offences are classified as cognisable and non-bailable, reflecting the seriousness with which tax authorities treat such violations.
Two Companies, One Pattern
Investigators allege that the two companies followed a similar pattern in their GST filings. Bendangtoshi Mining Pvt Ltd is accused of fraudulently claiming ITC worth ₹27.52 crore, while Kevitho Mining Pvt Ltd allegedly claimed ₹25.76 crore. In both cases, officials say the credits were availed without any corresponding supply of coal or other goods.
Scrutiny of GST returns revealed invoices that were not backed by e-way bills, transport documents or matching bank transactions—elements typically used to establish that goods have moved from seller to buyer and that payments have been made. The absence of these records raised red flags during routine verification, prompting a deeper probe by the anti-evasion unit.
Officials familiar with the investigation said the invoices appeared designed solely to generate ITC, enabling downstream benefits without any tax actually being paid into the system. Such practices, they noted, distort the GST framework, which relies on a chain of verified transactions to ensure tax compliance.
What the Verification Found
As part of the investigation, tax officials conducted physical verification at the registered business premises of both firms. According to official statements, these visits revealed that the establishments were either non-existent or non-operational. In some cases, investigators found no evidence of active business activity at the registered addresses, further undermining claims that the companies were engaged in genuine mining or trading operations.
The findings, officials said, cast “serious doubts” on the authenticity of the transactions declared in the GST returns. Without functioning offices, staff, stock or logistical arrangements, investigators concluded that the firms lacked the capacity to carry out the scale of operations reflected in their invoicing.
A Case Still Unfolding
The CGST department has indicated that the investigation is ongoing and may widen beyond the two companies and their director. Officials said they are working to identify other individuals and entities that may have played a role in facilitating or benefiting from the alleged fraud, including possible links to invoice issuers, recipients or intermediaries.
For now, Barbhuiya remains in custody as authorities continue to examine financial records, GST filings and associated documentation. Officials declined to speculate on potential recoveries or prosecutions, emphasizing that the process remains at an investigative stage.
