Meghalaya government probes fake firms linked to Rs 500 crore GST fraud

The Meghalaya government has launched an investigation into fake firms suspected of issuing bogus Input Tax Credit (ITC) outside the state, Taxation Minister Abu Taher Mondal informed the Assembly on September 11.

Responding to a Zero Hour notice raised by VPP legislator Ardent M Basaiawmoit over reports of a Rs 500 crore GST scam tied to coke plants, Mondal assured members that the state machinery is pursuing the matter seriously.

"I can assure the House that the state GST department is actively investigating fake firms operating within Meghalaya, which are engaged in passing on ITC to recipients located outside the state. A coordinated action is being taken against the fraudulent entities," he said.

The state has also written to the Directorate General of GST Intelligence (DGGI) for details to initiate proceedings against beneficiaries under its jurisdiction. According to Mondal, cases highlighted by the DGGI are regularly shared with the state, and action is taken whenever specific instances are identified.

Recent reports said four Assam residents were arrested on August 20 in a fake billing case. Another suspect, a coke plant owner from Byrnihat in Assam, was taken into custody on charges of evading GST worth Rs 150–200 crore. Mondal, however, noted that the DGGI has not disclosed which coke plants in Meghalaya may have benefited.

He reminded the House that since the 2014 ban on rat-hole mining, coke plants in the state have had to rely on district auctioned coal and imports. All inter-state coal purchases are reflected on the GST portal with e-way bills, but verifying authenticity remains difficult as Meghalaya officials cannot access supplier returns filed in other states.

"Fake invoices are typically issued to pass on bogus ITC. Such frauds can only be established if suppliers are non-existent, goods or services are not supplied, taxes are not paid as declared, or payment is made using bogus ITC," the minister said, stressing that such cases largely fall under the DGGI’s jurisdiction.

Government data shows that between 2022–23 and 2024–25, 29 of Meghalaya’s 54 registered coke plants were operational. Their collective turnover was Rs 307.06 crore, with a tax liability of Rs 18.75 crore. Of this, Rs 15.84 crore was adjusted through ITC and the remaining paid in cash.

During the same period, the plants procured 1,48,134 metric tonnes of coal from outside the state worth Rs 72.49 crore, paying Rs 24.57 crore as IGST. Mondal said reports did not specify whether the fake billing was tied to the sale of coke or coal purchases, but suggested it was “more likely connected to coal procurement by coke plants.” (With inputs from PTI)