DGGI uncovers Rs3,200 cr GST fraud, two held
The Directorate General of GST Intelligence (DGGI) has uncovered the fraud, leading to two arrests. The scam involved creating 15 shell companies that engaged in circular trading to inflate turnover, listed on stock exchanges, and fraudulently claimed Rs665 cr in input tax credit
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Bengaluru: The Directorate General of GST Intelligence (DGGI) in Bengaluru has uncovered a massive GST fraud amounting to Rs 3,200 crore and arrested two people in connection with the case. A third suspect remains at large, Sucheta Sreejesh, Additional Director General of DGGI Bengaluru zone, said in a statement.
The DGGI's Bengaluru zonal unit conducted searches at more than 30 locations across Bengaluru and Mumbai, uncovering a complex scam. The accused created bogus companies with no legitimate business operations, engaged in circular trading to inflate turnover, listed these companies on stock exchanges, and facilitated the fraudulent availing and passing of fake Input Tax Credit totaling Rs 665 crore. “The total value of fake invoices involved in the scam amounts to over Rs 3,200 crore,” she said.
The investigation uncovered 15 dubious companies with no actual business activity. These firms reported receiving FMCG goods worth hundreds of crores, but only issued invoices for services like IT support, management consultancy, and advertising.
Despite a large number of inward e-way bills, none of the companies had any outward e-way bills. Nine of these companies are even listed on Indian stock exchanges, according to officials. “Investigation indicates that promoters of such dubious companies resorted to circular trading of fake invoices to inflate turnover, increase the share price, sell the shares subsequently and exit the company, duping common public of their money invested in shares of such companies,” the statement said.
The probe also revealed that GST returns for most of these companies were filed from common IP addresses, suggesting that they were all operated by the same accused. Further searches at the companies' premises uncovered original documents such as invoices and financial records, stored across several locations, indicating that the same individuals were managing the affairs of multiple companies. “Considering the magnitude of the fraud and its impact on the common public, the Directorate General of GST Intelligence, Bengaluru Zonal Unit has initiated thorough investigation in the matter,” Sreejesh said.
