Massive Rs. 50,000 Crore GST Fraud Busted: 144 Fake Firms Under Investigation

A huge Goods and Services Tax (GST) scam, possibly one of the biggest in India, has been uncovered after investigations by the State Tax Department. Early reports show that a group of people have been faking and misusing tax credit claims for more than five years. The total fraud amount is now believed to be over Rs. 50,000 crore.

The State Tax Department’s mobile enforcement team in Moradabad seized two trucks carrying iron scrap. Team further checked related documents, which revealed suspicious information. The team traced the mobile numbers registered in the records and found that 122 shell companies were registered using two mobile numbers and three email IDs were used to set up an additional 22 firms.

Authorities discovered that these firms have been creating fake tax documents and wrongly claiming tax credits for more than five years. The firm used PAN cards issued in the names of individuals with no connection to the business, as per the department.

Tax experts said that when the Central GST (CGST) system was first introduced, the rules for checking new registrations were too relaxed. Because of this, many fake or fraudulent businesses were able to register without being caught.

“The registration process has now become far stricter. It can take up to two or three months for a new firm to be approved, and in many cases, applications are rejected and must be resubmitted due to enhanced scrutiny.”

However, apart from State Tax and Central agencies a special Investigation Team (SIT) is now organising an in-depth investigation into the network’s operations.

Earlier investigations show that people have already claimed fake tax credits worth over Rs. 2,000 crore, but officials think the real amount could be much higher.

R.A. Seth, Additional Commissioner (Special Investigation), stated, “The scale exposed so far is only the tip of the iceberg. A deeper probe could push the total fraud value beyond Rs. 50,000 crore.”

Investigation Team believe that the network was incorporated four to five years ago by using fake companies registered with falsified documents.

Chartered Accountant Abhinav Agarwal observed, “By portraying diverse business activities, the group legitimised tax evasion through fraudulent ITC claims. This is a clear example of systemic, organised financial fraud.”

One of the tax consultants pointed out, “Unless registration and transaction verification become fully automated, such organised networks will continue to exploit loopholes in India’s tax system.”

Tax and financial experts say that these kinds of scams can only be stopped if the government uses advanced systems to track and verify financial activities more effectively. They believe real-time data integration is important so that information from different departments, like income tax and GST, can be shared instantly and checked together.