Sikkim-based contractors probed over fake ITC claims

At least three suspicious business entities are currently under investigation 

SNS, SILIGURI, 15 JUNE 2025 : The Central Goods and Services Tax & Central Excise (CGST & CCE) Commissionerate in Siliguri has launched a detailed investigation into a group of Sikkim-based contractors allegedly involved in availing Input Tax Credit (ITC) without actual receipt of goods. Preliminary findings suggest that GST evasion through fraudulent ITC claims could amount to over ₹30 crore, allegedly availed without the actual movement or receipt of goods.

According to a press release issued by the Commissionerate, search operations were conducted at the declared business premises of the suspected contractors to gather evidence. During these searches, documents related to purchases — on the basis of which ITC had been claimed — were seized for further scrutiny. The department has so far identified at least three suspicious business entities that are currently under investigation.

"These taxpayers are engaged in providing works contract services for infrastructure projects in Sikkim. Several intelligence inputs were received indicating that large sums of ITC had been claimed without the receipt of goods or services. The illegally claimed ITC was then used to set off tax liabilities," said CGST officials.

Investigations have further revealed that a majority of goods shown as purchased by these firms originated from outside Sikkim, qualifying as inter-state supplies. "We are verifying all ITC claims made on such inward supplies. Additionally, many other works contract suppliers are under the department's radar for allegedly engaging in similar fraudulent practices involving paper ITC," the official sources added.

The CGST Commissionerate in Siliguri has initiated a special drive to tackle the misuse of fake ITC in the construction sector — an area particularly vulnerable to such fraud, often through inflated or fictitious billing of materials like cement and rods.