Major GST Fraud Detected: CGST Delhi Arrests Director for Rs 60.59 Crore Fake ITC Fraud

The Anti-Evasion Branch of the Central Goods & Services Tax (CGST), Delhi South Commissionerate, has arrested a director of a private limited company that trades in smartphones. The arrest was made because the company fraudulently claimed Input Tax Credit (ITC) worth Rs 60.59 crore by using fake invoices amounting to Rs 397.23 crore. This action violates Section 16 of the CGST Act, 2017, and such offences are punishable under Section 132 of the Act.

During the investigation, officials analysed the company’s GST return data and checked the supplier’s declared business address. They discovered that the location was only a co-working space, and there were no books of accounts, stock, invoices, or other proof of real business activity at the premises.

When the CGST team questioned him, the director could not give a proper explanation about how the business was operating or how payments for the transactions were made. Investigators also did not find any valid payment trail for the alleged supply of goods. This indicates that the transactions were not genuine and were created only to claim and use fraudulent Input Tax Credit.

The investigation showed that the director directly benefited from the tax fraud. The offence falls under Section 132(1)(c) of the CGST Act and is punishable under Section 132(1)(i).

After the arrest, the director was presented before the Duty Magistrate, who ordered judicial custody for 14 days.

The CGST Delhi South Commissionerate has been actively taking action against such tax frauds. In the current financial year, the department has already launched prosecutions against 45 people involved in GST fraud under the CGST Act, 2017.