The Directorate General of GST Intelligence (DGGI) Gurugram Zonal Unit recently conducted intelligence-based operations that exposed two major fraudulent activities. In the first instance, a large-scale racket comprising 539 fake entities was uncovered, which had fraudulently claimed Input Tax Credit (ITC) amounting to Rs. 1,124.66 crore. The second operation revealed a network of 19 fake entities involved in GST evasion amounting to Rs. 97.44 crore. Let's delve into the details of these operations and their significant outcomes.

Analysis:

Unearthing the Fake Entities Racket: The DGGI Gurugram Zonal Unit, through a meticulous investigation, uncovered a complex fraudulent scheme involving 539 fake entities. These entities illicitly passed on ITC worth Rs. 1,124.66 crore. The officials, relying on forensic examination, discovered a multitude of forged and morphed Aadhar cards, PAN cards, and GST registrations associated with these fraudulent firms. Moreover, sample invoices from these fictitious entities were also detected. Initial findings suggest that the fraudulent ITC credit eventually made its way into the metal and iron & steel sector, known for its susceptibility to tax evasion. As a result, the authorities managed to prevent the utilization of Rs. 814.61 crore in ITC by these deceitful entities, effectively safeguarding the government exchequer from further losses.

Busting the Mobile Phone Supply Fraud: In another significant discovery, the DGGI Gurugram Zonal Unit detected a prevalent modus operandi used in the mobile phone supply trade. Unscrupulous individuals purchased mobile phones from the grey market without proper invoices or acquired them from online e-commerce platforms using the names of unregistered individuals. These individuals hoarded the mobile phones and supplied them in bulk to various traders. However, since these goods lacked valid Input Tax Credit, the perpetrators resorted to creating a network of fake firms to generate fraudulent ITC. Subsequently, they used this fraudulent ITC to discharge their GST liabilities. As a result of the investigation, 19 fake entities were exposed, leading to the discovery of GST evasion amounting to Rs. 97.44 crore. The authorities have managed to recover Rs. 18.35 crore in this particular case, with one key person already arrested.

Impressive Results and Continued Efforts: In the financial year 2023-24, the DGGI Gurugram Zonal Unit has made substantial progress in combating tax fraud. A total of 1,198 fake GSTINs were identified, resulting in the detection of fraudulent ITC amounting to Rs. 2,762.30 crore. These efforts have effectively prevented a revenue loss of approximately Rs. 900 crore. Furthermore, six individuals have been apprehended in connection with these cases, illustrating the unit's commitment to curbing fraudulent activities.

Conclusion: The recent operations conducted by the DGGI Gurugram Zonal Unit have successfully exposed and dismantled significant fraudulent practices involving fake entities. By preventing tax evasion amounting to Rs. 1,124.66 crore and recovering substantial amounts, the authorities have demonstrated their dedication to preserving the integrity of the tax system. These actions serve as a deterrent to those engaging in fraudulent activities, emphasizing the importance of compliance and fair tax practices in the country.