Cuttack: Tax authorities in Odisha on Friday claimed to have unearthed a Rs 138 crore GST fraud, and arrested at least four persons for being part of a racket that created fictitious firms and fake invoices.

Investigations revealed that between August 2018 and September 2019, the fictitious firms used fake invoices and made purchases of over Rs 603 crore and sale of Rs 743 crore without paying taxes, but availed input tax credit, Goods and Services Tax (GST) Commissioner Sushil Kumar Lohani said.

He said as many as 20 fictitious firms in the names of housewives, taxi drivers, daily wage earners, plumbers, and unemployed youths were created by the racketeers.

"At least four persons have been arrested in this connection under different sections of the OGST Act, 2017," Lohani said.

"While one is the mastermind behind the multi-crore fraud, the remaining three are in the business of iron and steel goods," he said, adding, the scam led to a revenue loss of Rs 138 crore to the state exchequer.

Describing the modus operandi of the accused, he said that with the lure of providing employment, they collected identity documents of people, and opened bank accounts and obtained SIM cards through such records.

Lohani said steps are being taken to recover the input tax credit with interest and penalty.