Surat Diamond Traders Forging Invoices to Claim Fake GST Credit

Surat : Diamond traders in the world’s largest diamond cutting and polishing centre in Surat have come under a dark cloud, as the Goods and Service Tax (GST) department has unearthed a massive racket of fake invoices and fraudulent claims of Input Tax Credit (ITC).

Dozens of diamond traders in the city are in the crosshairs of the department for allegedly claiming crores of rupees in illegal ITC by furnishing bogus invoices of Mumbai-based traders.

The modus operandi was deceptively simple. In order to avoid paying GST on their diamond purchases within Surat, traders resorted to a creative accounting trick. They fabricated invoices showing their rough diamond purchases as originating from Mumbai, a location where GST on such transactions would be applicable. Armed with these fake invoices, they claimed ITC from the government in Surat, essentially pocketing the tax credit they were never entitled to.

“Investigations revealed that invoices submitted by Surat traders of their supposed Mumbai purchases were bogus,” stated an official source, confirming the extent of the fraudulent activity. The scam’s scale is not insignificant, with the GST department already stalling Rs 2 crore worth of fraudulent ITC claims.

This intricate web of deceit not only deprives the government of rightful tax revenue but also creates an unfair advantage for the diamond traders involved. By skipping out on their GST obligations, they undercut their honest competitors operating within the legal framework.

“We have submitted all the details of this scam to the Income Tax department for further scrutiny,” the official source revealed, hinting at a potential widening of the investigation. With the tax authorities hot on their trail, the future for these diamond traders looks far less glittering than their prized gems.

Industry veteran Rameshchandra Patel, commenting on the scam, expressed concern about the “negative impact on the reputation of Surat’s diamond industry.” He urged stricter regulatory measures to “weed out such unscrupulous practices and ensure a level playing field for all.”

Tax law expert Janak Pachigar highlighted the “serious legal ramifications” facing the traders involved. “Claiming fake ITC is a criminal offense under the GST Act, and if convicted, these traders could face hefty penalties and even imprisonment,”