DGGI detects 1700 fraudulent ITC cases of Rs.18,000 crore with 98 arrests in FY 2023-24

The Directorate General of GST Intelligence (DGGI) caught 98 fraudsters/ masterminds and detected 1,700 fake ITC claims totalling Rs.18,000 crore during the current financial year 2023-24 (till December 2023).

In this financial year, DGGI has placed a special priority on identifying and apprehending the masterminds of fraudulent Input Tax Credit (ITC) and disrupting syndicates operating throughout the country. DGGI has unravelled cases utilising data analysis and advanced technology methods, resulting in the arrest of tax evaders.

These tax syndicates often use gullible persons and entice them with job/commission/bank loans etc. to extract their Know Your Customers (KYC) documents which were then used for the creation of fake / shell firms/companies without their knowledge and consent.

In certain circumstances, the KYC procedure was used with the concerned person’s knowledge by offering them tiny financial incentives.

The following cases were detected by DGGI during the period:

Case 1:

It was gathered by the DGGI that a well-organized racket of fake/bogus firms is operated from Sirsa, Haryana. On basis of data analytics using E-way bill portal, it was revealed that M/s. S.D. Traders, Delhi, was a newly registered firm having NIL inward supplies at root level, yet it generated a significant number of E-way bills.

Furthermore, an investigation of outbound shipments by M/s. S.D. Traders found 38 hitherto unknown enterprises in the Delhi and Haryana districts. Based on IP address analysis, a premises in Sirsa was identified as being used for GST returns.

A search was done in Sirsa, Haryana, and it was discovered that a well-organised racket of fake/bogus firms was operating from the said premises. The DGGI recovered some documentary evidence, two laptops, seven mobile phones, and several SIM cards, and detained Mr. Manoj Kumar, one of the primary operators of the bogus firm racket, in Sirsa. The analysis of outward supplies data reveals a potential avoidance of Rs. 1,100 crore in fake ITC.

Case 2:

In another interesting case, cases against beneficiary firms based in Jaipur, Rajasthan were booked by DGGI for availing ITC from certain fake firms based in Sonipat, Haryana, and Delhi, without receipt of actual goods.

Further inquiry found that Mr. Ashutosh Garg, a resident of Ghaziabad, Uttar Pradesh, and the owner of M/s. Shree Jee Spices, Chandni Chowk, Delhi, was involved in the development, operation, and sale of bogus enterprises with the intention of passing on invalid ITC for a fee. Searches were done at Mr. Garg’s business premises in Delhi and his residential premises in Ghaziabad.

Crucial evidence has been gathered from the above premises, indicating that Mr. Garg passed on fake ITC worth Rs. 1,033 crores through 294 fake entities and received a commission of 1.25% of the taxable value. Mr. Garg was also detained and taken to judicial custody.

Case 3:

In another case, intelligence gathered that a specific IP address was utilised for filing GST returns of various unrelated/fake firms in West Sagarpur, Delhi.

As a result, a search was performed in Sagarpur, New Delhi, and one desktop computer, electronics storage devices, multiple mobile phones, chequebooks, rubber stamps, rent agreements, banners, and other items were recovered from one Mr. Mukesh Kumar Jha. Mr. Kumar stated that he works under the direction of Mr. Amit Kumar Jha, Mr. Roshan, and Mr. Vansh Chaudhary and that they operate from an office in Uttam Nagar, Delhi.

As a result, a search was performed in Uttam Nagar, Delhi, and all three individuals were determined to be present.

On the basis of search and evidence in custody, all four persons admitted their role in a recorded statement admitting the creation and operation of 122 fake firms through which fake ITC of Rs. 315 crore was passed on to the recipient firms without concomitant supply of goods/ services. Accordingly, all four masterminds were arrested.

Case 4:

A gathered intelligence indicated that various OPCs (one-person companies) were formed or bought from the market to initiate ITC fraud dealing in the supply of services, mainly using co-working spaces, for commission @4-8%.

Based on the obtained intelligence and additional investigation, a search was undertaken in Pitampura, Delhi, and several incriminating documents, PAN cards, Aadhar Cards with the same photo but different names, a laptop, and four mobile phones with SIM cards were recovered.

Evidence indicated that 190 fake firms were created and ineligible ITC amounting to Rs. 393 crore passed on. One Mr. Rahul, who was available at the premise, admitted to being instrumental in operating fake firms, having 06 PAN cards and 05 Aadhar cards forged for obtaining Digital Signatures used in creating/operating the fake firms in Delhi-NCR, was arrested by DGGI and remanded for 14-day judicial custody.