DGGI Gurugram officials bust racket involving 539 fake entities and fraudulently claiming ITC of Rs. 1,124.66 crore, one held

In another operation, GST evasion of Rs. 97.44 crore through a network of 19 fake entities busted

In an intelligence-based operation, the Directorate General of GST Intelligence (DGGI), Gurugram Zonal Unit, has unearthed a major fraudulent Input Tax Credit (ITC) racket involving 539 fake entities, which have passed on fraudulent ITC of Rs. 1,124.66 crore.  So far, one key operative has been arrested. 

On the basis of forensic examination, huge number of forged/morphed Aadhar card, PAN card, huge number of GST registrations of fake firms & sample invoices of fake firms etc. were detected. Initial investigations indicate that the fraudulent ITC credit has eventually travelled to the highly evasion prone metal/iron & steel sector. In this matter, Rs. 814.61 crore of ITC availed by these fraudulent entities, for the purpose of passing on, has been prevented from being utilised, this pre-emptive action has prevented further loss to govt. exchequer.

The DGGI Gurugram Zonal Unit officials have also detected a modus operandi prevalent in the trade of supply of mobile phones wherein mobile phones are purchased from grey market without any underlying invoice or from online e-commerce platforms in the name of various unregistered individuals. Some unscrupulous elements/persons hoard these mobile phones and supply them in bulk to various traders. However, as the goods are bereft of ITC that can be utilised further, these persons create a network of fake firms to generate fraudulent ITC and then use this fraudulent ITC for further discharging their GST liability.

So far, a network of 19 fake entities has been unearthed during a investigation and a detection of GST evasion of Rs. 97.44 crore has been made, resulting in recovery of Rs. 18.35 crore. In one such recent detection involving fraudulently availed ITC of Rs. 9.58 crore, a key person has been arrested.

In the Financial Year 2023-24, Gurugram Zonal Unit has unearthed 1,198 fake GSTINs, involving fraudulent ITC detection of Rs. 2,762.30 crore, and have prevented revenue loss to the tune of Rs. 900 crore (approx). In all 6 persons have been arrested in these cases.

Fraudulent Input Tax Credit schemes using fake registrations and invoices exposed, triggering enforcement action and recoveries. Investigation uncovered large-scale Input Tax Credit (ITC) fraud using forged identity documents, fake GST registrations and sham invoices to create and circulate fraudulent ITC, with credits channelled into high-risk sectors. Enforcement prevented utilisation of substantial fraudulent ITC and effected recoveries; arrests of key operatives were made. A described modus operandi in the mobile-phone trade shows goods acquired without legitimate invoices are routed through networks of sham firms to generate false ITC and evade GST liabilities.