Pune, Oct 6 (PTI) A racket of generating fake Goods and Services Tax (GST) invoices for fraudulently claiming the input tax credit (ITC) on non-supplied goods was busted in Pune with the arrest of two persons, officials said on Sunday.

The alleged fraud is believed to be to the tune of Rs 700 crore.

The preventive wing of the the Central Goods & Services Tax (CGST), Pune, claimed that two city-based firms allegedly indulging in this malpractice were busted.

The two firms - M/s Reliable Multitrading and M/s Himalaya Tradelinks- had obtained GST registrations and together issued fake GST invoices of approximately Rs 700 crore with the GST component of Rs 54 crore to facilitate bogus input tax credit (ITC) claims thus duping the government exchequer, an official release said.

According to officials, the partners of these firms-Ashok Thepde and Vilas Atal- were arrested under section 69 (1) of CGST At, 2017.

"The accused are part of a racket involving the issuance of fake GST invoices to claim fraudulent ITC from the government without any receipt or supply of goods," the release said.

As per GST laws, ITC can be availed only against the taxes paid to the government on receipt of goods or services. However, such firms exist only on papers and offer bogus transactions without any supply of goods, it added.

Officials said some "incriminating" documents were seized during the searches carried out at the premises of the companies.

"It was observed that these documents were fabricated and made according to the GST compliance norms to make the transactions appear real," they added.

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