Massive GST Fraud uncovered involving 500 Fake Companies

The Delhi government’s anti-corruption branch has detained seven people, including a suspended GST official, three advocates, two transporters, and the owner of a fake firm, for their involvement in a GST fraud racket.

The fraud involved bogus GST refunds worth over Rs.54 crore, as well as the discovery of forged invoices totalling Rs.718 crore. The operation found roughly 500 non-existent firms that looked to be conducting business activities exclusively on paper in order to collect fraudulent refunds, according to the report.

Officials have cited numerous procedural failures and malpractices by the arrested GST official, Babita Sharma, who has subsequently been suspended. The fraudulent refunds were purportedly issued without sufficient verification of input tax credit, resulting in a significant loss for the government’s exchequer.

ACB Chief Joint Commissioner Madhur Verma explained the nature of the fraud:

“A total of Rs 718 crore in input tax credit has been taken against fake invoices. In the case of 15 enterprises, there was no Aadhaar authentication at the time of registration or physical verification of the firm. Five organizations were discovered to have numerous GSTIN registrations using the same PAN/email ID/mobile number.”

Verma further explained the fraudulent activities:

“Forged expressway invoices for carrying items and goods receipts were used in refund requests. Twenty-three of the 96 fake firms are controlled by the same set of offenders, i.e., accused activists utilizing similar email addresses and mobile numbers.”

The investigation also discovered that refund payments were being rotated through various bank accounts, which benefited those advocating and their families. Approximately 1,000 additional bank accounts were discovered while checking 127 bank accounts directly linked to fake firms and their affiliates.

An unusual trend of corporate movements prompted a thorough investigation into the alleged GST fraud. Babita Sharma, the GST officer in question, was reassigned from Ward 6 to Ward 22 on July 26, 2021. During her tenure, she granted 53 firm migration requests in a short amount of time, raising suspicions.’

The ACB has filed a case under the Prevention of Corruption Act and many IPC sections relating to cheating, forgery, and criminal conspiracy. Other accused in the case include Raj Singh Saini, Narender Kumar Saini, Mukesh Saini, Manoj Goyal, Surjeet Singh, and Lalit Kumar, all of whom work as lawyers, proprietors, and transporters.