The Directorate General of GST Intelligence ( DGGI ), Pune Zone, has uncovered a massive GST fraud amounting to Rs. 1,196 crore involving a sophisticated network of bogus companies, fake invoices, and fraudulent Input Tax Credit (ITC) claims. The scam spanning multiple cities was orchestrated through a cartel that manipulated GST registrations using fake identities to evade detection.
Following extensive investigations and searches in Pune, Delhi, Noida, and Muzaffarnagar, authorities have arrested one individual, identified as the director of a private limited company in Muzaffarnagar. Officials revealed that the accused, along with others in the cartel, created a web of shell entities with no legitimate business operations, generating fraudulent invoices and E-way bills without actual movement of goods to falsely claim ITC.
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According to the Press Information Bureau (PIB) statement issued on Wednesday, the investigation revealed that the fraudulent network maintained a database of addresses, identities, email IDs, and phone numbers, which were strategically rotated to obtain new GST registrations and continue their illicit activities.
“The newly created firms had directors or proprietors selected from this repository, allowing the fraudsters to sustain their illegal operations without being easily detected,” the release stated.
Authorities found that the E-way bills generated by these firms had no RFID movements, confirming that no actual supply of goods took place. The fake invoices and fraudulent ITC claims were then circulated within the network, leading to a loss of Rs. 1,196 crore to the government.
Officials confirmed that one individual has been arrested so far and further investigations are underway to trace more members involved in the operation.
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Businesses are advised to verify their supply chain partners and invoices carefully to avoid getting entangled in such fraudulent networks. Authorities are expected to introduce stricter digital verification and tracking mechanisms to prevent such scams in the future.
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