Chhattisgarh Coal Trader Nabbed in Massive Rs 512 Crore GST Fraud Scandal

In a major crackdown, the Madhya Pradesh Economic Offences Wing (EOW) arrested coal trader Zafar Sheikh from his residence in Marwahi, Chhattisgarh, on Thursday, in connection with a Rs 512 crore Goods and Services Tax (GST) fraud. The arrest, executed during a morning raid by a seven-member EOW team from Bhopal, marks a significant breakthrough in an ongoing investigation into a sophisticated scam involving fake coal transactions and fraudulent Input Tax Credit (ITC) claims.

Sheikh is accused of collaborating with Vinod Kumar Sahay, the alleged mastermind arrested earlier in Ranchi, Jharkhand, to orchestrate a network of over 23 shell companies across Madhya Pradesh, Chhattisgarh, and Maharashtra. These entities, existing solely on paper, generated fake GST invoices to siphon off tax credits, causing massive losses to the exchequer. The scam involved manipulating coal supply records and issuing fraudulent bills to industrial units, with no actual goods or services exchanged.

The EOW’s probe revealed that Sheikh played a key role in generating fake invoices through firms registered in Jabalpur but operating across state borders. Authorities suspect the financial trail may extend further, potentially implicating additional companies and political patrons. The Enforcement Directorate is expected to join the investigation, with more arrests likely as the EOW expands its probe into other coal traders in the region.

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This case, described as one of the largest GST evasion scams in central India, underscores serious gaps in regulatory oversight of interstate commodity movement. The Chhattisgarh GST department has vowed to intensify audits, particularly in high-risk sectors like coal trading, to curb such fraudulent practices.

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