Directorate General of GST Intelligence Unearths Massive Fake ITC Cases Worth Rs. 18,000 Crore

New Delhi:  In the ongoing Financial Year 2023-24, up to December 2023, the Directorate General of GST Intelligence (DGGI) has detected a staggering 1,700 fake Input Tax Credit (ITC) cases, involving an estimated Rs. 18,000 crore. In a relentless pursuit of tax evaders, DGGI has apprehended 98 fraudsters and masterminds associated with these cases, as part of its focused efforts to combat fraudulent activities across the country.

DGGI has been utilizing advanced data analysis and technical tools to uncover intricate cases of tax evasion, particularly in the realm of fake ITC. The syndicates involved in these activities often manipulate individuals, enticing them with job opportunities, commissions, or bank loans to extract their Know Your Customers (KYC) documents without their knowledge. Subsequently, these documents are used for the creation of fake or shell firms, contributing to the fraudulent schemes.

Several noteworthy cases have been brought to light by DGGI during this period:

1. S.D. Traders Racket (Sirsa, Haryana): DGGI uncovered a well-organized racket operating from Sirsa, Haryana. Through data analytics using the E-way bill portal, M/s. S.D. Traders, a newly-registered firm with no inward supplies, was identified. Further investigation revealed 38 non-existent firms in Delhi and Haryana linked to it. A search in Sirsa led to the apprehension of Mr. Manoj Kumar, a key operator, and the seizure of evidence indicating a potential evasion of Rs. 1,100 crore in fraudulent ITC.
2. Shree Jee Spices Scheme (Jaipur, Rajasthan): DGGI booked cases against a beneficiary firm in Jaipur for availing ITC from fake firms in Sonipat and Delhi. Mr. Ashutosh Garg, proprietor of M/s. Shree Jee Spices, was found to be engaged in creating and selling fake firms for passing on ineligible ITC, amounting to Rs. 1,033 crore. Searches at business and residential premises led to the collection of crucial evidence, and Mr. Garg was arrested.
3. IP Address Fraud (Delhi-NCR): DGGI discovered a scheme using specific IP addresses for filing GST returns of various unrelated/fake firms in West Sagarpur, Delhi. Searches resulted in the recovery of evidence indicating the creation and operation of 122 fake firms, passing on fake ITC of Rs. 315 crore. Four individuals involved in masterminding the fraud were arrested.
4. OPCs and Co-working Spaces Scam (Pitampura, Delhi): Intelligence suggested the use of one-person companies (OPCs) for ITC fraud, mainly dealing in services using co-working spaces. A search in Pitampura, Delhi, uncovered evidence of 190 fake firms created, passing on ineligible ITC of Rs. 393 crore. Mr. Rahul, instrumental in operating fake firms, was arrested with multiple forged PAN cards and Aadhar cards.

The ongoing crackdown by DGGI underscores the government’s commitment to combatting tax evasion and ensuring the integrity of the GST system. The cases reveal the complex nature of these fraudulent schemes and the meticulous efforts employed by authorities to curb such activities.