DGGI Officials bust racket involving 539 Fake Entities and Fraudulently claiming ITC of Rs.1124.66 crore; One Arrested

The Directorate General of GST Intelligence (DGGI), Gurugram Zonal Unit, has identified a massive fraudulent Input Tax Credit (ITC) racket involving 539 fake firms that have passed on fraudulent ITC worth Rs. 1,124.66 crore in an intelligence-based operation. So far, one significant operative has been apprehended.

Based on forensic assessment, a large number of forged/morphed Aadhar cards, PAN cards, GST registrations of false organisations, sample invoices of fraudulent enterprises, and other documents were discovered. According to preliminary investigations, the fake ITC credit finally made its way to the extremely evasive metal/iron & steel industry. In this case, Rs. 814.61 crore of ITC obtained by these fraudulent businesses for the purpose of passing on has been prohibited from being used, preventing additional damage to the government exchequer.

Officials from the DGGI Gurugram Zonal Unit have also discovered a common practise in the supply of mobile phones in which mobile phones are acquired from the grey market without any underlying invoice or through online e-commerce platforms in the names of multiple unregistered persons. Some unscrupulous elements/persons stockpile these mobile phones and sell them in large quantities to other vendors.

However, because the goods lack ITC that may be used further, these individuals set up a network of bogus organisations to earn counterfeit ITC, which they then use to offset their GST due.

So far, a network of 19 fake entities has been unearthed during a investigation and a detection of GST evasion of Rs.97.44 crore has been made, resulting in recovery of Rs.18.35 crore. In one such recent detection involving fraudulently availed ITC of Rs.9.58 crore, a key person has been arrested.

In the financial year 2023-24, Gurugram Zonal Unit discovered 1,198 bogus GSTINs, resulting in a fraudulent ITC detection of Rs. 2,762.30 crore and a revenue loss of Rs. 900 crore (estimated). In total, six people have been arrested in these incidents.