Belagavi DGGI Uncovers Massive Rs 593 Crore Fake GST Invoice Racket
In a significant crackdown on tax evasion, officers from the Directorate General of GST Intelligence (DGGI) at the Belagavi zonal unit have exposed a colossal fake Input Tax Credit (ITC) racket. The fraudulent operation involved the generation of bogus invoices with an astounding total value of approximately Rs 593 crore, shaking the foundations of the GST compliance system in the region.
Investigation Triggered by Suspicious GST Registration
The breakthrough came following a meticulous investigation into a suspicious GST registration that raised red flags among authorities. This initial probe swiftly escalated into multiple coordinated search operations targeting premises associated with M/s Star Tax Consultant, located in Bengaluru. The searches laid bare a sophisticated and well-organized network allegedly dedicated to issuing counterfeit invoices without any genuine supply of goods or services whatsoever.
This elaborate scheme enabled the wrongful availment and illicit transfer of Input Tax Credit, amounting to nearly Rs 235 crore. Preliminary findings from the investigation indicate that several GST registrations were operated exclusively for the purpose of generating these fake invoices and corresponding e-way bills. This systematic manipulation allowed beneficiaries to fraudulently claim substantial tax credits, siphoning off public funds.
Mastermind and Modus Operandi Revealed
Investigators pinpointed Mohammad Saifullah, a registered GST practitioner, as the alleged mastermind orchestrating this extensive fraud. Saifullah was discovered to be managing multiple non-existent GST Identification Numbers (GSTINs) and coordinating the issuance of fake invoices and e-way bills. In return for his services, he allegedly received commissions calculated as a percentage of the invoice value, profiting handsomely from the illicit activities.
When confronted with irrefutable evidence gathered during the investigation, Saifullah admitted to his central role in the fraudulent operation, according to official statements. The accused reportedly utilized online accounting software to meticulously record and track transactions that were routed through a web of shell entities. These entities had no legitimate business activities, serving merely as fronts to facilitate the fake invoice racket.
Arrest and Legal Proceedings
Mohammad Saifullah was arrested on February 24 in Bengaluru under the provisions of Section 69 of the Central Goods and Services Tax Act, 2017. Following his arrest, he was produced before the Special Court for Economic Offences in Bengaluru. The court granted transit remand, authorizing his transfer to Belagavi for further legal proceedings.
Subsequently, Saifullah was presented before the JMFC-IV court in Belagavi, where he was remanded into judicial custody. This step marks a critical phase in ensuring accountability for the alleged economic offenses. The arrest underscores the DGGI's commitment to tackling GST fraud with stringent legal actions.
Ongoing Investigation and Future Steps
A comprehensive investigation remains actively underway as authorities work to identify additional beneficiaries linked to this racket. Officials are determined to unravel the full extent of the fraud, which may involve more shell entities and fraudulent transactions beyond the current estimates. The DGGI is leveraging digital forensic tools and financial audits to trace the flow of illicit funds and expose all parties complicit in the scheme.
This case highlights the persistent challenges in curbing GST evasion through sophisticated means. It also serves as a stern warning to those attempting to exploit the tax system for personal gain. The Belagavi DGGI's successful operation demonstrates the effectiveness of vigilant monitoring and proactive enforcement in safeguarding public revenue and maintaining the integrity of India's GST framework.
