Major GST Fraud Network Busted in Multi-City Operation
In one of the most significant crackdowns this year, the Ahmedabad zonal unit of the Directorate General of GST Intelligence (DGGI) has exposed an extensive fake GST invoicing scheme valued at nearly Rs 800 crore. The investigation led to the arrest of four primary conspirators across three distinct cases that spanned multiple cities and states.
The elaborate network operated through shell companies, forged identities, and digital infrastructure to generate fraudulent input tax credit (ITC) without any actual movement of goods. The investigation covered locations including Ahmedabad, Rajkot, Bhavnagar, Junagadh, Jamnagar, Mumbai, and Chandrapur, revealing a sophisticated organized crime operation.
Three Separate Cases Unravel Complex Fraud Scheme
In the largest of the three cases, involving bogus invoices worth Rs 550 crore, DGGI officials arrested Badre Alam Pathan and Taufik Khan from Ahmedabad on November 27. Taufik Khan, who operates as the proprietor of A H Engineering Works, allegedly obtained fake invoices valued at Rs 45 crore and fraudulently claimed ITC of Rs 8.86 crore.
According to official statements, the accused, along with absconding individuals including Ikram Khan, established multiple companies using forged documents, appointed dummy directors, and managed the entire operation online to simulate legitimate business activities.
Extensive searches conducted across Mumbai, Chandrapur, Ahmedabad, Rajkot, and Bhavnagar resulted in the seizure of crucial evidence including:
- Records of shell companies
- Mobile phones and SIM cards linked to various GST registrations
- Digital files and bank account details
- Cash transaction logs and other incriminating materials
Sophisticated Modus Operandi Revealed
Rajesh Kumar, Additional Director of DGGI's Ahmedabad Zonal Unit, explained the syndicate's methodology: "The criminal network purchased dormant companies with active GSTINs, altered their directors and addresses, mass-produced fake invoices, and routed cash reversals through hawala channels."
The investigation revealed that these entities primarily issued bogus invoices to iron and steel manufacturing units in Ahmedabad, Jamnagar, Rajkot, and Maharashtra. These recipient companies are now under scrutiny for potential tax evasion and clandestine clearances.
In response to these findings, DGGI has issued an advisory urging owners of dormant firms not to transfer their GST registrations to intermediaries. Instead, they should surrender these registrations free of cost if they have ceased business operations.
Parallel Investigations Uncover Additional Fraud Networks
In a separate case, Hardik Raval, partner of Bharat Sanitary & Fitting in Junagadh, was arrested on November 25 for orchestrating a network of 47 dummy firms. Officials confirmed that he fraudulently availed ITC of Rs 28.02 crore based on bogus invoices totaling Rs 110.57 crore without receiving any actual goods.
DGGI officials stated that Raval allegedly issued outward invoices worth Rs 83.64 crore to distribute fake ITC of Rs 20.24 crore to multiple buyers. The operation involved intermediaries, angadiya channels, and layered fund transfers through banking channels. Digital evidence and voluntary statements have substantiated his involvement in the scheme.
In the third case connected to Jamnagar's brass and steel trade, Jaydeep Virani, partner of Patel Metal Craft LLP, was arrested on November 28. He allegedly claimed inadmissible ITC of Rs 22 crore using fake invoices valued at Rs 121 crore issued by more than 40 non-existent firms.
Searches across Jamnagar and Rajkot yielded substantial evidence including cheque books, documents, mobile phones, computers, and other materials. Investigators discovered that several Jamnagar-based entities were using bogus invoices to conceal unaccounted sales of scrap, brass, and stainless-steel products.
Serious Legal Consequences for Economic Offences
Under Section 132 of the CGST Act, fraudulent ITC claims exceeding Rs 5 crore constitute grave economic offences that can lead to imprisonment of up to five years along with substantial fines. These offences are classified as cognisable and non-bailable, reflecting their serious nature.
DGGI officials confirmed that the voluminous evidence collected from multiple locations is currently being examined to map the complete network and identify all end beneficiaries involved in these sophisticated fraud operations.
The crackdown represents one of the most significant actions against GST fraud in the region this year and highlights the ongoing efforts to combat economic crimes that undermine India's tax system.
