The Directorate General of GST Intelligence (DGGI) Pune Zonal Unit has uncovered a fraudulent input tax credit (ITC) scam worth Rs 1,196 crore. Officials have arrested one individual in connection with the GST Fraud, while investigations into the wider network remain ongoing.
According to a statement issued by the Press Information Bureau (PIB), the investigation spanned multiple locations, including Pune, Delhi, Noida, and Muzaffarnagar. Authorities identified a network of bogus companies engaged in fraudulent ITC transactions.
Modus Operandi
Investigators revealed that the accused had set up shell entities with no legitimate business operations. These entities generated fake invoices and e-way bills to simulate genuine trade. However, the e-way bills showed no RFID movements, confirming that no actual supply of goods took place.
The scheme allowed the fraudsters to avail and pass on fake ITCs worth Rs 1,196 crore, causing a significant loss to the exchequer.
Key Findings
Authorities have uncovered a database containing addresses, identities, email IDs, and phone numbers used to obtain new GST registrations and evade detection. Fraudsters rotated this data strategically to create and sustain fictitious firms.
During searches at multiple locations, officials recovered:
- Original invoices
- Financial records
- Company stamps and seals
These findings indicate centralised control over multiple shell firms. So far, investigators have identified at least 20 such fictitious companies with no real business activity. Authorities have also frozen one bank account linked to the fraudulent network.
Arrest and Further Investigation
The arrested individual is a director of a private limited company in Muzaffarnagar. Investigators suspect that a broader cartel is involved in the operation, and further arrests are likely.
Officials continue to scrutinise financial transactions and business activities associated with the identified firms. Authorities are also examining whether similar fraudulent networks exist in other parts of the country.
Related Case in Maharashtra
In a separate development, authorities have arrested another individual in Maharashtra’s Thane district for orchestrating a similar GST fraud. The accused, identified as Kapadiya Mahamad Sultan, allegedly created 18 fictitious firms to generate fake invoices and claim ITC without any actual supply of goods or services.
According to CGST Joint Commissioner Amit Kumar Singh, Sultan was arrested in Mira Road, Thane, on Monday. Authorities believe he played a key role in executing the scam and sustaining the fraudulent network.
Ongoing Action Against GST Fraud
The recent crackdown highlights the scale of GST fraud in India and the growing use of shell companies for tax evasion. Authorities continue to monitor suspicious transactions and tighten enforcement measures against fake ITC claims.
Officials have urged businesses to remain vigilant and report any suspicious financial activity related to GST transactions. The investigation into the Rs 1,196 crore scam is ongoing, with more arrests expected in the coming weeks.
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