The Central GST Commisionerate in Itanagar arrested two persons hailing from Bihar’s Darbhanga district on Monday on charges of “fraudaulent passage” of input tax credit under GST through a “fake” firm registered in the northeastern state.

The GST’s Commissionerate said in a statement on Tuesday that the duo had used “forged documents “to create a fake firm (M/s Siddhi Vinayak Trade Merchants registered in Itanagar), generation of invoices without supply of goods, the manipulation of GST returns to avail Input Tax Credit fraudulently resulting in a loss of near about ₹100 crore to the Government exchequer”.

The Commissionerate said its investigation revealed that the “fake” firm “had engaged in the fraudulent passage of Input Tax Credit (ITC) of ₹99.30 crores to fifty eight firms across the country” and the “two masterminds in this fake racket” were Ashutosh Kumar Jha and Bipin Kumar Jha.

The accused were earlier arrested by Itanagar Police from Darbhanga in a forgery case on a complaint lodged by the CGST.

On Monday, they were arrested by the commisionerate under Section 69 of the CGST, which confers power on a commissioner to arrest, as they were found to have “orchestrated a complex network of fraudulent transactions across the country, utilizing forged documents and fake identities, to facilitate the passage” of input tax credit, which is a tax a business pays on its purchases and which can be claimed back to lower the tax it owes when it sells products or services”.

A CGST official told The Telegraph the arrested duo, Bipin, 32, and Ashotosh, 28, were brothers and they operated from Calcutta.