GHAZIABAD: The Uttar Pradesh State Tax Department’s Special Task Force (STF) raided the office of Krishna Gears Pvt Ltd in Ghaziabad on the basis of highly credible intelligence, and it unearthed a huge scam worth crores of rupees under which fraudulent claims have been made under the Production Linked Incentive (PLI) scheme and illegal Input Tax Credit (ITC) gains.
Krishna Gears, one of the leading producers of industrial gears and machinery parts and a significant supplier to Neyveli Lignite Corporation (NLC), a Navratna PSU under the Ministry of Coal, was reportedly substituting Chinese imports for domestically produced items. The products were channelled through a shell unit, Krishna Slew Rings, that shares the same address. The objective was to fraudulently claim government incentives and subsidies under the Make in India initiative.
As per officials, the modus operandi of these entities also included circular trading between Krishna Gears and its shell companies so that they could illegally avail of ITC.
The STF, in the course of enforcement action, confiscated undeclared stock and recovered Rs 1.60 crore worth of cash deposits.
Officials believe that the directors of the company have floated numerous other shell companies for identical purposes.
Directors of Krishna Gears Pvt Ltd, Virender Kumar Khanna and Sanjay Khanna, were not there at the time of the raid and have been called for questioning. Sahaj Khanna, Sanjay Khanna’s son and director of Krishna Slew Rings, also remains under scrutiny. Investigation agencies are casting their net to include relatives of the accused in Delhi as well and anticipate more enforcement measures in the days to come.
Early financial investigations reveal stark variances in the company’s financial statements. Krishna Gears’ turnover in FY 2023–24 stood at Rs 2,755.40 lakhs, but TDS information reflects supplies of Rs 3,069.57 lakhs—demonstrating a puzzling mismatch of Rs 314 lakhs. Further, discrepancies between e-way bills and toll plaza figures, as well as inward and outward supplies mismatches reported, indicate large off-the-books sales.
The operation of enforcement is closely watched by UP State Tax Commissioner M. Devraj and the Chief Minister’s Secretariat.
Officials have confirmed that central agencies such as the Directorate of Revenue Intelligence (DRI), Customs, Income Tax, Enforcement Directorate (ED), Economic Offences Wing (EOW), and concerned ministries such as Coal and MSME are being put on alert for parallel probes.