DGGI uncovers 1700 fraudulent ITC cases worth Rs 18,000 cr in FY 2023-24

The Directorate General of GST Intelligence (DGGI) has unveiled 1,700 fake Input Tax Credit (ITC) cases involving a sum of Rs 18,000 crore in the current financial year up to December 2023.
Moreover, the agency has made 98 arrests in connection with these fraudulent activities across the country, according to the Ministry of Finance.
In the current financial year, the DGGI has prioritized the identification and apprehension of masterminds orchestrating fake ITC schemes, the release said.
As per the release, DGGI has unravelled cases using data analysis aided by advanced technical tools which led to the arrest of tax evaders.
These tax syndicates often use gullible persons and entice them with job/commission/bank loans etc to extract their Know Your Customers (KYC) documents which were then used for the creation of fake / shell firms/companies without their knowledge and consent, it stated.
In some cases, the KYC method was used with the knowledge of the concerned person by paying them small pecuniary benefits.
It was gathered by the DGGI that a well-organized racket of fake/bogus firms is operated from Sirsa, Haryana.
Based on data analytics using the E-way bill portal, it was revealed that SD Traders, Delhi, was a newly registered firm having NIL inward supplies at the root level, yet it generated a significant number of E-way bills.
Further, on analysis of outward supplies M/s. S.D. Traders, initially 38 non-existent firms in Delhi and Haryana areas were revealed. On analysis of IP Address, a premises at Sirsa was identified, which was being used for filling GST Returns.
The search was conducted at Sirsa, Haryana, and it was found that a well-organised racket of fake/bogus firms was being operated from the said premises. Certain documentary evidence, 2 Laptops, 7 mobile phones, and various SIM cards were seized and Manoj Kumar, one of the key operators of the racket of fake firms, was arrested from Sirsa by the DGGI. The analysis of outward supplies data indicates a potential evasion of Rs 1,100 crore of fraudulent ITC.
In another interesting case, as per the release, cases against a beneficiary firm based in Jaipur, Rajasthan booked by DGGI for availing ITC from certain fake firms based in Sonipat, Haryana, and Delhi, without receipt of actual goods.
On further investigation, it was revealed that Ashutosh Garg, a resident of Ghaziabad, Uttar Pradesh, is the proprietor of Shree Jee Spices, Chandni Chowk, Delhi, was engaged in the creation, operation and selling of fake firms to pass on ineligible ITC for a commission. Searches were conducted at the business premises (Delhi) as well as the residential premises (Ghaziabad) of Garg and related persons.
Crucial evidence has been collected from the above premises which indicate that Garg passed on fake ITC amounting to Rs 1,033 crores through 294 fake firms and received commission @ 1.25 per cent of taxable value. Further, Mr. Garg was arrested and sent to Judicial Custody.
Further as per the release, in another case, intelligence gathered that a specific IP address was utilised for filing GST returns of various unrelated/fake firms in West Sagarpur, Delhi. Accordingly, a search was conducted at Sagarpur, New Delhi, and one desktop, electronics storage device, several mobile phones, chequebooks, rubber stamps, rent agreements, banners, etc were resumed from one Mukesh Kumar Jha.
Kumar informed that he works under the direction of Amit Kumar Jha, Roshan and Vansh Chaudhary and they operate from an office in Uttam Nagar, Delhi.
Accordingly, a search was also conducted at Uttam Nagar, Delhi, and all three persons were found present at the said premises. Based on search and evidence in custody, all four persons admitted their role in a recorded statement admitting the creation and operation of 122 fake firms through which fake ITC of Rs 315 crore was passed on to the recipient firms without concomitant supply of goods/ services. Accordingly, all four masterminds were arrested.
A gathered intelligence indicated that various OPCs (one-person companies) were formed or bought from the market to initiate ITC fraud dealing in the supply of services, mainly using co-working spaces, for commission @4-8 per cent.
Based on gathered intelligence and further analysis, a search was conducted in Pitampura, Delhi and various incriminating documents, Pan Cards, Aadhar Cards having the same photo but different names, 1 laptop, and 4 mobile phones with SIM cards were recovered. Evidence indicated that 190 fake firms were created and ineligible ITC amounting to Rs 393 crore passed on.
One Rahul, who was available at the premise, admitted to being instrumental in operating fake firms, having 6 PAN cards and 5 Aadhar cards forged for obtaining Digital Signatures used in creating/operating the fake firms in Delhi-NCR, was arrested by DGGI and remanded for 14-day judicial custody.