Recently, the Directorate General of GST Intelligence's Gurugram Zonal Unit has brought to light a substantial Input Tax Credit (ITC) fraud. This intricate scheme involves 461 fraudulent shell entities, all of which combined have claimed a shocking Rs. 863 crore. Preliminary investigations indicate that the fraudulent ITC credit from this operation has made its way into sectors notorious for tax evasion, particularly the metal, iron, and steel sectors. As the case unfolds, it underscores the urgent need for stricter regulations and oversight to prevent such massive financial frauds in the future. Relevant Press release is as follows:-

Ministry of Finance

DGGI Gurugram officials bust ITC racket involving 461 shell entities with fraudulently claiming Rs 863 crore, 2 held

Recently, the Gurugram Zonal Unit of Directorate General of GST Intelligence have unearthed a major fraudulent Input tax Credit (ITC) racket involving 461 shell/fake entities, which had passed on fraudulent ITC of Rs. 863 crore. In this matter till date, two key operatives have been arrested.

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. 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 forensic examination of the laptops, devices seized from this office led to the eventual detection of ITC fraud to the tune of Rs. 863 crore involving fake 461 entities and arrest of two key operatives. Initial investigations indicates that the fraudulent ITC credit has eventually travelled to the highly evasion prone metal/iron & steel sector.