New Delhi, Jan 22 (UNI) The Enforcement Directorate (ED), Itanagar Zonal Office, on Thursday said it recently carried out search operations at ten premises across West Bengal, Manipur, and Jharkhand in connection with a Rs 100-crore fake Input Tax Credit (ITC) fraud.
The ED initiated an investigation under the Prevention of Money Laundering Act (PMLA) based on FIRs registered under various sections of the Indian Penal Code, following a complaint filed by the CGST and Central Excise, Itanagar Commissionerate, against Sidhi Vinayak Trade Merchant, Arunachal Pradesh. The firm was found to be non-existent at its declared address.
Investigation revealed that the firm had fraudulently issued a total of 15,258 bogus invoices with a taxable value of Rs 658.55 crore within a span of six months to 58 recipient entities registered across 11 states, during the period from October 2023 to March 2024. These fraudulent invoices facilitated the wrongful availment of fake ITC amounting to approximately Rs 99.31 crore by the said entities during FY 2023–24.
During the searches, it was found that Dayal Commercial, Apee Enterprises, Phoenix Hydraulics, Ram Awatar Bansal & Co., and Bhima Shankar Industries, having their principal place of business in Kolkata, were solely engaged in generating bogus bills and passing on fake ITC. These entities generated fake bills worth Rs 450 crore along with corresponding fraudulent ITC claims by fabricating records of vehicle manufacture and sales through bogus invoices.
They also fraudulently claimed GST refunds, which were siphoned off and shared among promoters, suppliers and professional facilitators. Fake e-way bills and kickbacks to officials were also detected.
In Manipur, FEMA Marketing’s principal place of business was found to be under construction, with no business activity being carried out from the premises. However, as per the GST portal, the entity has shown the said premises as its place of business and claimed to be operating from there for the past three years. It declared fictitious turnovers of Rs 6.05 crore and passed on fraudulent ITC to leading companies, highlighting the large-scale misuse of the GST mechanism.
In Jharkhand, an entity operated by Mahesh Prasad Gupta admitted to availing fake ITC and failed to provide relevant invoices, e-way bills and lorry receipts.
Most of the entities involved in generating fake ITC operated for a short span of six to eight months and issued bogus invoices to generate fraudulent ITC.
Although their GST registrations were later cancelled by the CGST, they had already generated and circulated the ITC, which was ultimately used by some genuine entities. This modus operandi resulted in huge losses to the government and generated proceeds of crime in the hands of the proprietors and operators of these entities.
The case originated from fake ITC claims of Rs 99 crore arising out of bogus billing of Rs 658 crore. However, evidence uncovered during the searches indicates a much larger quantum of fake ITC involving multiple entities across several states. Statements of key persons were recorded during the searches, in which they admitted to not carrying out any genuine business activities.
The searches resulted in the freezing of bank balances, seizure of documents related to immovable properties, and recovery of incriminating records exposing systematic misuse of the GST framework through bogus invoicing, fake e-way bills and layered fund transfers. An amount of Rs 21 lakh lying in the bank accounts of S.K. Construction was also frozen during the operation.
Further investigation into the matter is ongoing.
