Introduction: The Central Goods and Services Tax (CGST) Delhi East Commissionerate has successfully dismantled a complex network of 48 fake firms engaged in a massive ₹199 crore fraudulent Input Tax Credit (ITC) scheme. Codenamed “Operation Clean Sweep,” this enforcement action reveals the depth of deception within the GST framework. Initiated based on human intelligence, this operation involved meticulous data mining and on-the-ground intelligence, resulting in the identification and arrest of three key individuals.

Introduction: The Central Goods and Services Tax (CGST) Delhi East Commissionerate has successfully dismantled a complex network of 48 fake firms engaged in a massive ₹199 crore fraudulent Input Tax Credit (ITC) scheme. Codenamed "Operation Clean Sweep," this enforcement action reveals the depth of deception within the GST framework. Initiated based on human intelligence, this operation involved meticulous data mining and on-the-ground intelligence, resulting in the identification and arrest of three key individuals.

Detailed Analysis: In the initial phase of "Operation Clean Sweep," investigators uncovered 48 sham firms, characterized as either non-existent entities or mere paper entities. These entities were found to be issuing bogus invoices for transactions that never transpired—a clear violation of GST laws. The investigation revealed that the fraudulent ITC claimed by these entities exceeded ₹199 crores. Three individuals, including the proprietor of M/s M.K. Traders, were apprehended and subsequently remanded to judicial custody for their involvement in the elaborate scam.

The primary actor, the proprietor of M/s M.K. Traders, was found to have availed fraudulent ITC exceeding ₹5 crores, with a significant portion of this amount passed on to other interconnected links in the syndicate. The other two individuals arrested were identified as facilitators, actively aiding and abetting the syndicate's operations.

During the operation, incriminating evidence was seized, including stamps from 55 different firms, numerous SIM cards, and documents such as AADHAR cards and electricity bills belonging to third parties. The complexity of the operation was heightened by the challenging terrain, navigating through narrow lanes and sensitive areas of Delhi. The success of the operation was made possible through the collaborative efforts of the CGST officers and the Delhi Police, who provided crucial support by deploying adequate personnel.

Conclusion: "Operation Clean Sweep" marks a significant triumph for the CGST Delhi East Commissionerate in its ongoing efforts to combat fraudulent activities within the GST framework. The exposure of a syndicate operating 48 fake firms highlights the need for continuous vigilance and proactive enforcement measures. With three key individuals already in custody, further investigations are underway to uncover additional members of the syndicate and identify the masterminds behind this elaborate scheme. The success of this operation underscores the importance of collaborative efforts between law enforcement agencies and regulatory bodies to ensure the integrity of the taxation system and protect against financial malpractices.

****

Ministry of Finance

CGST Delhi East busts a syndicate of 48 fake firms availing fraudulent ITC of over 199 crores in "Operation Clean Sweep", 3 arrested

Posted On: 21 NOV 2023 5:23PM by PIB Delhi

The Central Goods and Services Tax (CGST) Delhi East Commissionerate has busted a syndicate of 48 interconnected fake firms availing fraudulent ITC of over ₹199 crores in "Operation Clean Sweep". The CGST Delhi East commenced coordinated "Operation Clean Sweep" against fake billers, based on gathered human intelligence which was further developed through data mining and data analysis aided by on ground intelligence.

In the first wave of the operation, a total of 48 fake/bogus firms – either non-existent or paper firms – have been identified that were dealing in bogus invoices. Such invoices were made without the actual supply of goods or services, which is an offence under GST Law. Three persons were apprehended and arrested and subsequently sent to judicial custody remand for two weeks by the Chief Metropolitan Magistrate Court, Patiala House. Other members of the syndicate and the ring leaders have been identified and further investigation is being carried out.