DGGI Uncovers ₹800 Crore Fake GST Billing Racket, Four Arrested

The Ahmedabad zonal unit of the Directorate General of GST Intelligence (DGGI) has made significant strides in combating tax fraud by uncovering a massive fake GST invoicing scheme valued at nearly ₹800 crore. In a series of coordinated operations, four key conspirators were arrested across multiple locations, including Ahmedabad, Rajkot, and Junagadh, as part of the crackdown on this extensive network.

The investigations revealed an organized operation that utilized shell companies, forged identities, and virtual setups to generate fraudulent input tax credit (ITC) without any real movement of goods. In the most substantial case, involving bogus invoices worth ₹550 crore, DGGI officials arrested Badre Alam Pathan and Taufik Khan from Ahmedabad on November 27, 2023. Khan, who owns A H Engineering Works, is alleged to have procured fake invoices totaling ₹45 crore and claimed fraudulent ITC amounting to ₹8.86 crore.

Investigators revealed that Pathan, Khan, and other absconding suspects, including Ikram Khan, established multiple firms using forged documentation. They appointed dummy directors and operated the entire scheme online to simulate legitimate business activities.

In a broader investigation, searches conducted across Mumbai, Chandrapur, Ahmedabad, Rajkot, and Bhavnagar resulted in the seizure of incriminating materials. This included records of shell companies, mobile phones, and documentation related to various GST registrations. Rajesh Kumar, Additional Director of DGGI Ahmedabad Zonal Unit, stated, “The syndicate bought dormant companies with active GSTINs, altered their directors and addresses, mass-generated fake invoices, and routed cash reversals through hawala channels.”

DGGI officials have urged owners of dormant firms not to relinquish their GST registrations to intermediaries. They recommend surrendering registrations free of charge if the companies are no longer operational.

In another case, Hardik Raval, a partner at Bharat Sanitary & Fitting in Junagadh, was arrested on November 25, 2023. He allegedly masterminded a network of 47 dummy firms, fraudulently availing ITC of ₹28.02 crore on bogus invoices totaling ₹110.57 crore. Raval is accused of issuing outward invoices worth ₹83.64 crore to facilitate the transfer of fake ITC amounting to ₹20.24 crore to multiple buyers.

In a third case linked to the brass and steel trade in Jamnagar, Jaydeep Virani, partner of Patel Metal Craft LLP, was arrested on November 28, 2023. He allegedly obtained inadmissible ITC of ₹22 crore based on fake invoices valued at ₹121 crore issued by over 40 non-existent firms. Searches in Jamnagar and Rajkot uncovered cheque books, documents, mobile phones, and computers, all serving as evidence of the fraudulent activities.

DGGI officials noted that several entities in Jamnagar were found using bogus invoices to conceal unaccounted sales of scrap, brass, and stainless-steel products. Claims of fraudulent ITC exceeding ₹5 crore are considered serious economic offenses under Section 132 of the CGST Act, which could lead to imprisonment of up to five years and hefty fines. The offenses are categorized as cognizable and non-bailable.

The volume of evidence collected during the investigations is currently being analyzed to establish the full extent of the network and identify the ultimate beneficiaries of this fraudulent scheme.