Lucknow, Apr 22 (PTI) Police on Wednesday said they busted a gang that lured people with promises of loans under the Mudra scheme, collected their identity documents, and used them to set up bogus GST firms to carry out input tax credit (ITC) fraud worth about Rs 1.3 crore.

Police arrested Ravindra Giri (35), a native of Lakhimpur Kheri, and recovered three mobile phones from his possession.

Additional Deputy Commissioner of Police (Crime Branch) Kiran Yadav said, "In the Rs 1.3 crore GST ITC fraud case, the accused revealed during questioning that he collected Aadhaar and PAN from people on the pretext of facilitating Mudra loans, procured SIM cards using those details and created fake GST firms to execute the fraud." Using the illegally obtained SIM cards, the accused registered fake GST firms with forged rent agreements and electricity bills, police said.

These shell entities were then used to generate fake invoices and e-way bills to show fictitious transactions as legitimate and sell fraudulent ITC on commission, causing significant revenue loss, officials said.

The case was registered at the Rahimabad police station based on a complaint by a state tax official regarding a non-existent firm claiming ineligible ITC.

Yadav said the accused has confessed to the crime, and further investigation is underway.

"Necessary legal action is being taken, and more arrests are likely," she added. Police said cyber and surveillance teams assisted in busting the racket. PTI KIS ASD ASD

GST input tax credit fraud through bogus firms, forged documents, and fake invoices exposed in a loan-lure racket. GST input tax credit fraud involving bogus firms was allegedly carried out by collecting Aadhaar and PAN details on the pretext of Mudra loans, obtaining SIM cards, and registering fake GST entities with forged rent agreements and electricity bills. The shell entities were used to generate fake invoices and e-way bills, project fictitious transactions as genuine, and sell fraudulent ITC on commission. A case was registered on a complaint about a non-existent firm claiming ineligible ITC, and one accused was arrested.