Fake Companies, Real Money: How GST Scam Worked

Recently, a massive tax evasion scam has been discovered, in which the Enforcement Directorate (ED) has revealed that 135 fake firms were generating fake invoices worth 14,325 crore, leading to GST evasion of Rs. 800 crore.

Investigators have found Shiv Kumar Dewda as the main head of this operation. He is a Kolkata-based businessman. As per the Enforcement Directorate (ED), Shiv Kumar Dewda and some other associated individuals formed dozens of bogus companies in Jharkhand and West Bengal. This assisted them in claiming intensive Input Tax Credit (ITC) fraudulently via non-existent transactions and fake invoices.

Using this technique, the group of individuals extracted crores of tax benefits by using public salaries for private profit. During the investigation, Rs. 60 lakh has been confiscated from the accounts of 10 banks associated with these fake firms.

Main Individuals and Their Fake Businesses

Regarding this fraud, till now, 4 individuals have been arrested by the investigators.

• Shiv Kumar Dewda, reported as the mastermind, is presently in the custody of the Enforcement Directorate (ED).
• Vicky Bhalotia, a Jugsalai-based businessman from Jamshedpur
• Mohan Dewda and Amit Gupta, both from Kolkata
• All three individuals, except Shiv Kumar, are currently in Birsa Munda Central Jail, Ranchi, under judicial custody.

The lead investigation uncovered that Shiv Kumar Dewda alone ran seven fake companies. Falsely claiming ITC worth Rs. 55.83 crore. His associated members included Amit and Mohit Gupta, who ran a total of six fake companies and claimed ITC worth Rs. 47.51 crore.

Bhalotia, working from Jamshedpur, was caught using six fake companies to claim Rs. 15.95 crore in false tax credits. Both offenders also worked as directors in numerous fake companies.

Each of the accused also played the role of director in multiple shell companies, making the fraud harder to trace on paper and confusing the regulators who try to oversee it.

Crackdown and What Happens Next

On May 7 and 8, the ED searched places in Ranchi, Jamshedpur, and Kolkata. They found mobile phones, digital proof, and papers that show the fraud. These searches showed that the fraudsters made complicated company setups to trick tax officials.

This case has revealed big problems in the GST system’s ability to find and stop fake invoices, especially when the fraud happens across different states, with confusing digital records and circular money moves.

As experts check the details and question the suspects, the police expect to make more arrests and seize more evidence. It looks like there is a larger network involving illegal money transfers (hawala) and professionals helping the fraud.