The Central Goods and Services Tax (CGST) department has arrested four persons for allegedly making false input tax credit (ITC) claims causing loss to the exchequer to the tune of at least Rs 400 crore, sources said.
While one person was remanded to departmental custody of the CGST office for seven days, the rest were sent to judicial custody for as many days.
"We will study the case and if required, we will look into the money laundering aspect," ED sources told news agency PTI.
Sources in the department said that the mastermind Pankaj Bagla acted as a broker for creating false bills for enterprises helping them to avail ITC claims.
The enterprises would benefit after getting the ITC claims as it would reduce their output tax liability to be paid in cash to the government.
Another arrested person B Singhania, who is a CA, acted as a conduit and enabled various enterprises to avail false ITC.
The remaining two persons, brothers R Kyal and S Kyal who own a genuine enterprise, used to purchase leather wallets in cash and false bills were sourced from the racket run by Bagla.
After export, they claimed and got refund of the amonut of tax paid from the government equal to the amount of ITC paid by them as shown in the purchase bill.
"It is purely a GST fraud and Rs 400 crore is at a conservative level. The amount is going to increase", the sources said.
All the arrested persons are now being interrogated, he said.
According to him, these people have honed their expertise in making false claims during the earlier VAT regime.