Finance Ministry while informing about the fraud in a press release on Thursday said, "This racket of passing on of fraudulent ITC through fake shell entities was detected, when based on intelligence a search was carried out at a secret office being operated for this purpose."

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 "Huge number of forged/ morphed/ fake soft copies of documents like rent agreements, electricity bills, aadhar card, driving license, PAN card, etc. were detected in the laptops resumed from this secret office, which were used to create and operate their fake entities" the release by Finance ministry added

The Ministry further explained that the forensic examination of the laptops and other devices that were seized from this secret office led the authorities to detect the ITC fraud of ₹863 crore and make the arrest of two key operatives involved. It also informed that the initial investigation suggests that fraudulent ITC credit has 

led to the eventual detection of ITC fraud to the tune of Rs. 863 crore involving fake 461 entities and the arrest of two key operatives. Initial investigations indicate that the fraudulent ITC credit has eventually travelled to the evasion-prone metal/iron & steel sector.

In a similar case of GST fraud, Gautam Budh Nagar police on June 1 busted a gang for orchestrating a fraudulent scheme of around ₹10,000 crore. The operation involved registering thousands of companies from stolen or fake identities and using them to generate e-way bills and receive input tax credit from the government. Police had arrested unearthed 2,660 fake companies and arrested eight suspects during the course of the investigation.