Itanagar, Sep 4 (PTI) The Police in Arunachal Pradesh's Naharlagun have unearthed a Goods and Services Tax (GST) fraud worth Rs 1.09 crore and arrested two men accused of running a fake invoice racket.

Addressing a press conference on Thursday, Naharlagun Superintendent of Police Nyelam Nega said the scam came to light after an FIR was lodged on June 28 by Taju Parang, the proprietor of a company.

Parang had informed the police that invoices worth over Rs 1 crore had been mysteriously transferred into his firm's account from two Assam-based companies - one of Tinsukia and the other of Jorhat - without his knowledge.

After an investigation, the police arrested two persons.

"It was found that the accused had befriended the complainant and fraudulently obtained his GST login credentials. They then struck a deal with the two Assam firms, offering them 15 per cent of profits from selling fake invoices," the SP said.

The duo used Parang's firm to float fake invoices amounting to Rs 1.09 crore, which were later pitched to two companies, police said.

The fraud surfaced after GST authorities flagged unusually high transactions from Parang’s company which was not operational at the time.

Notices sent to the firm alerted Parang, who approached the police.

The licenses of the two Assam-based companies have since been suspended.

By then, the accused had pocketed nearly Rs 22 lakh by selling the fake invoices.

Warning the general public to exercise caution while dealing with traders, the SP said, "Always insist on an e-GST invoice while purchasing goods like cement." PTI CORR NN

GST invoice fraud using stolen GST credentials led to arrests and licence suspensions after a fake invoice racket was uncovered. GST invoice fraud was executed by fraudulently obtaining a proprietor's GST login credentials and using his dormant firm to issue and sell fake invoices to third parties; GST monitoring flagged atypical transactions, prompting an FIR, arrests of two suspects, and suspension of the buyer companies' licences.