DGGI’s Vigilance Triumph: Detects 1,700 Fraudulent ITC Cases, Involving Rs. 18,000 Crore with 98 Arrests in Financial Year 2023-24 (up to December 2023)

In the current Financial Year 2023-24 (up to December 2023), 1,700 fake ITC cases involving Rs. 18,000 crore have been detected and 98 fraudsters/masterminds have been apprehended by the Directorate General of GST Intelligence (DGGI).

In the current financial year, the Directorate General of GST Intelligence (DGGI) has laid special emphasis to identify and apprehend the masterminds of fake Input Tax Credit (ITC) and disrupting syndicates, operating across the country. DGGI has unraveled 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 enticed them with job / commission / bank loan etc. to extract their Know Your Customers (KYC) documents which were then used for creation of fake / shell firms / companies without their knowledge and consent.

In some cases, KYC method was used with the knowledge of the concerned person by paying them small pecuniary benefits.

The following cases were detected by DGGI during the period:

• It was gathered by the DGGI that a well-organized racket of fake / bogus firms is operated from Sirsa, Haryana.  On basis of data analytics using E-way bill portal it was revealed that M/s. S.D. Traders, Delhi, was a newly-registered firm having NIL inward supplies at root level, yet it generated a significant number of E-way bill. 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. Search was conducted at the Sirsa, Haryana, and it was found that a well-organised racket of fake/bogus firms was being operated form the said premises. Certain documentary evidence, 2 Laptops, 7 mobile phones, various SIM cards were seized and Mr. Manoj Kumar, one of the key operators of racket of fake firms, was arrested from Sirsa by the DGGI. Through the analysis of outward supplies data indicates a potential evasion of Rs. 1,100 crore of fraudulent ITC.

• In another interesting case, cases against a beneficiary firms based in Jaipur, Rajasthan was 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 Mr. Ashutosh Garg, a resident of Ghaziabad, Uttar Pradesh, the proprietor of M/s. Shree Jee Spices, Chandni Chowk, Delhi, was engaged in creation, operation and selling of fake firms for the purpose of passing on ineligible ITC for a commission. Searches were conducted at the business premises (Delhi) as well as residential premises (Ghaziabad) of Mr. Garg and related persons. Crucial evidences have been collected from the above premises which indicates that Mr. Garg passed on fake ITC amounting to Rs. 1,033 crore through 294 fake firms and received commission @ 1.25 % of taxable value.  Further, Mr. Garg was arrested and sent to Judicial Custody.

• 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 devices, several mobile phones, cheque-books, rubber stamps, rent agreements, banners, etc were resumed from one Mr. Mukesh Kumar Jha. Mr, Kumar informed that he works on the direction of Mr. Amit Kumar Jha, Mr. Roshan and Mr. Vansh Chaudhary and they operated from a office in Uttam Nagar, Delhi. Accordingly, a search was also conducted at Uttam Nagar, Delhi, and all the three persons were found present at the said premises. On the basis of 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 market to initiate ITC fraud dealing in supply of services, mainly using co-working spaces, for commission @4-8%.  On basis of gathered intelligence and further analysis, a search was conducted in Pitampura, Delhi and various incriminating documents, Pan Cards, Aadhar Cards having same photo but different names, 01 laptop, 04 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 Mr. Rahul, who was available at the premise, admitted to be instrumental in operating fake firms, having 06 PAN cards and 05 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.