Pune, 12 February 2025: The Directorate General of GST Intelligence (DGGI), Pune Zonal Unit, has uncovered a massive GST fraud amounting to Rs 1,196 crore and has arrested one individual in connection with the case. The investigation, involving searches at multiple locations in Pune, Delhi, Noida and Muzaffarnagar, has revealed a sophisticated network of bogus companies engaged in fraudulent Input Tax Credit (ITC) transactions.

The accused had set up shell entities with no legitimate business operations, generating fake invoices and e-way bills to create a facade of genuine trade. However, these e-way bills had no RFID movements associated with them, confirming the absence of actual supply of goods. The fraudulent network facilitated the availing and passing of fake ITC worth Rs 1,196 crore.

The arrested individual, the director of a private limited firm in Muzaffarnagar, is identified as the mastermind behind the operation. The investigation uncovered that the cartel maintained a database of addresses, identities, email IDs, and phone numbers, which were strategically rotated to obtain new GST registrations and evade detection. The newly created firms had directors or proprietors selected from this repository, allowing the fraudsters to sustain their illicit activities.

Further inquiries revealed that the accused, misused the personal details of unsuspecting employees—primarily from economically weaker sections—who were unaware of the legal implications of GST registration. The fraudulent firms engaged in circular trading, acting both as suppliers and recipients within the cartel to facilitate ITC fraud. To avoid suspicion, these firms were registered as private limited companies, using ITC from fake supplies to discharge tax liabilities and pass on ITC to beneficiaries.

During searches at multiple locations, officials recovered original invoices, financial records, company stamps, and seals, indicating centralized control over multiple shell firms. The investigation has so far identified 20 such fictitious companies with no genuine business activity. Authorities have also frozen one bank account linked to a fraudulent entity, with further investigations underway.

Source: DGGI Pune Zonal Unit