The Directorate General of Goods and Services Tax Intelligence in Chhattisgarh detected a fraud of Rs 141 crore, said officials. Two persons have also been arrested in this connection.
Central GST and Excise department of Raipur unearthed the scam.
"The proprietor of Shyam Sales Corporation Aayush Garg and his partner Santosh Agrawal were taken into custody. The firm deals in iron products," said an official.
"The firm in its records, has shown that it had purchased row material of Rs 141 crore from 12 Odisha-based companies that actually don't exist," the official said.
"On the pretext of such fake purchases, the company has committed a misappropriation of Rs 21 crore tax money".
Moreover, the investigation revealed that among the vehicles that were shown as used to fetch the material, many were two-wheelers and had not even passed the toll points that were mentioned in the records.
After registering a case, police produced the accused before the court from where they were sent to two days judicial custody.