The Directorate General of GST Intelligence (DGGI) in Bengaluru has uncovered a massive GST fraud involving Rs 3,200 crore, leading to the arrest of two individuals. A third suspect remains on the run, according to Sucheta Sreejesh, Additional Director General of the DGGI Bengaluru zone.
The Bengaluru zonal unit of DGGI carried out searches at over 30 locations across Bengaluru and Mumbai, exposing a complex scam. The accused set up fake companies with no legitimate operations, engaged in circular trading to inflate turnover, and listed these companies on stock exchanges. They also facilitated the fraudulent availing and passing of fake Input Tax Credit, totaling Rs 665 crore.
The investigation revealed 15 companies with no genuine business activities. These companies reported receiving FMCG goods worth hundreds of crores but issued invoices for services like IT support, management consultancy, and advertising. Despite numerous inward e-way bills, there were no outward e-way bills. Nine of these companies were even listed on Indian stock exchanges.
Authorities found that the promoters of these companies used circular trading to manipulate share prices, sell shares, and exit, defrauding the public of their investments. Further investigation showed that GST returns for many of these companies were filed from the same IP addresses, pointing to a single operation behind multiple firms.
Given the scale of the fraud and its impact on the public, DGGI Bengaluru has initiated a thorough investigation into the matter.
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