Jamnagar: The State GST Department has unearthed a fraudulent input tax credit (ITC) racket involving fabricated transactions of more than ₹128 crore and has arrested two persons in connection with the scam, a press release said.

As per the note, acting on specific information and subsequent analysis, the Department carried out coordinated search and seizure operations on 16 June 2026 against 22 firms, including M/s. Mandovara Trading Co., across Jamnagar, Rajkot, Ahmedabad, Gandhinagar, Vadodara, Surat and Bhavnagar.

In the course of these operations, the Department arrested Sureshchandra Moolchand Shah, proprietor of M/s. Mandovara Trading Co., and his son, Ayush Sureshchandra Shah, from Jamnagar, for their involvement in tax evasion exceeding ₹23.08 crore.

Investigation revealed that the firm engaged in large-scale tax evasion by recording bogus purchases of brass and copper scrap and claiming fraudulent input tax credit on the strength of those non-genuine transactions. Preliminary inquiries indicate that M/s. Mandovara Trading Co. reflected fabricated transactions of more than ₹128 crore routed through bogus firms and without the physical movement of goods, with the intent of defrauding the government exchequer of tax exceeding ₹23.08 crore.

The wrongful availment of input tax credit constitutes an offence under Section 132(1)(c) of the GST Act, while the issuance of fake invoices to pass on ITC constitutes an offence under Section 132(1)(b) of the GST Act. After establishing the clear involvement of the two accused, the Department placed them under arrest to facilitate further investigation.

As the investigation advances, the Department anticipates that further tax evasion and additional outstanding GST liabilities may come to light. The State Tax Department is pursuing appropriate legal action vigorously to protect and recover government revenue in this matter, a press release said. DeshGujarat