In a major crackdown on Goods and Services Tax (GST) evasion, authorities in Ahmedabad have unearthed a sophisticated network of fake firms involved in a massive fraudulent input tax credit (ITC) scheme. The Ahmedabad zonal unit of the Directorate General of GST Intelligence (DGGI) has detected a case where eight GST-registered entities were used to illegally avail and pass on ITC, causing a significant loss to the national exchequer.
Coordinated Raids Uncover Fraudulent Network
Acting on specific intelligence inputs, DGGI officials conducted synchronized searches at multiple locations across Ahmedabad. During these operations, a trove of incriminating evidence was seized. This included physical documents, digital devices like computers and phones, and crucial financial records. The seized materials painted a clear picture of a well-organized racket designed to game the GST system.
The investigation revealed that these firms were involved in the circular issue and receipt of invoices without any genuine movement or supply of goods or services. The estimated taxable turnover generated through this paper-only network is a staggering Rs 1,300 crore. The corresponding evasion of GST, through the wrongful claim of input tax credit, is pegged at approximately Rs 78 crore.
Mastermind Used Dummy Directors to Float Firms
Preliminary findings point to the central role of one individual in orchestrating the entire scam. The network was allegedly controlled by Prabhat Somani, a resident of Ahmedabad. Investigators claim that Somani floated the eight firms by appointing dummy or figurehead directors to hide his own involvement.
Evidence gathered so far indicates that Somani was the operational brain behind the scam. He is alleged to have managed the GST registrations of these firms, filed their returns, handled banking transactions, and orchestrated the movement of illicit funds. This end-to-end control allowed the network to function smoothly and avoid early detection.
Arrest Made as Probe Expands
Given the serious nature of the offences, which are cognisable and non-bailable under the GST law, Prabhat Somani was placed under arrest. His custodial interrogation is expected to help officials unravel deeper connections and trace the final beneficiaries of the fraudulently availed funds.
The DGGI's investigation is actively continuing. Officials are now focused on two key fronts: identifying other individuals or entities who benefited from this fake invoice network, and meticulously tracing the complex flow of the illicit funds. More arrests or actions against accomplices cannot be ruled out as the probe advances.
This case highlights the continued vigilance of tax authorities against sophisticated financial frauds that aim to undermine the GST regime. It serves as a stern warning to those attempting to exploit the system for illegal gains.
