The Pune Zonal Unit of the Directorate General of GST Intelligence (DGGI) has busted a Goods and Services Tax (GST) evasion racket involving a fraudulent input tax credit (ITC) scam of ₹1,196 crore and arrested one individual in connection with the case.

The investigation has revealed a sophisticated network of bogus companies engaged in fraudulent Input Tax Credit (ITC) transactions, reported PTI quoting DGGI Pune Zonal Unit.

The authorities have also frozen one bank account linked to a fraudulent entity, with further investigations underway.

Officials said that the the accused set up shell entities with no legitimate business operations, generating fake invoices and e-way bills to create a facade of genuine trade.

"These e-way bills had no RFID movements associated with them, confirming the absence of actual supply of goods," the officials said.

The mastermind behind the scam has been identified as a director of a private limited firm in Muzaffarnagar.

DGGI Pune Zonal Unit says:

— The cartel maintained a database of addresses, identities, email IDs, and phone numbers, which were strategically rotated to obtain new GST registrations and evade detection.

— The newly created firms had directors or proprietors selected from this repository, allowing the fraudsters to sustain their illicit activities.

— Original invoices, financial records, company stamps, and seals, indicating centralized control over multiple shell firms were recovered during searches at multiple locations.

Meanwhile, authorities also busted a GST evasion racket and and arrested its "mastermind" in Maharashtra's Thane district.

The accused, Kapadiya Mahamad Sultan, orchestrated the fraud by setting up 18 fictitious entities which were used to generate fake invoices and claim ITC without any actual supply of goods or services, PTI quoted CGST Joint Commissioner Amit Kumar Singh as saying in a release.

Sultan, resident of Mira Road area in Thane, was arrested on Monday, the official said.