PMLA Court Denies Bail in Rs.730 Crore Fake GST Credit Scam

A special Prevention of Money Laundering Act (PMLA) court in Ranchi rejected the bail plea of Jamshedpur-based businessman Vicky Bhalotia alias Amit Agarwal in connection with an alleged GST fraud involving fraudulent tax claims of nearly Rs. 730 crore.

The Enforcement Directorate (ED) is investigating the matter under the provisions of the Prevention of Money Laundering Act after the Directorate General of GST Intelligence (DGGI) unearthed a large-scale fake invoicing racket. The prosecution alleged that the accused persons generated bogus invoices and bills amounting to nearly Rs. 14,325 crore through a network of over 90 shell companies.

According to the investigation, the syndicate allegedly created fake input tax credit entries using dummy entities and fraudulently claimed ineligible GST benefits exceeding Rs. 730 crore, resulting in substantial loss to the government revenue.

Bhalotia, a resident of the Jugsalai area in Jamshedpur, had moved the special PMLA court seeking bail on May 6. After hearing submissions from both sides, the court rejected the plea considering the seriousness and magnitude of the alleged economic offence.

The investigation revealed that the alleged scam was operated through more than 90 shell companies used for generating fake invoices and wrongful input tax credit claims.

The ED initiated the money laundering probe on the basis of proceedings launched by the DGGI following an official complaint recorded by GST officer Dinesh Singh. Several businessmen have already been arrested in connection with the case.

Apart from Vicky Bhalotia, the ED has also arrested Shiv Kumar Devda, Mohit Devda, Sumit Gupta and Kolkata-based businessman Amit Gupta for their alleged involvement in the fraudulent network.

Investigators stated that a substantial part of the alleged operation was being run from Jamshedpur through interconnected shell entities and accommodation transactions.

Taking a serious view of the alleged financial fraud and money laundering activities, the special PMLA court declined to grant bail to the accused businessman.

With the rejection of the bail application, the Enforcement Directorate is expected to continue its probe into the larger shell company network and the alleged diversion of public revenue through fake GST claims.