CGST Uncovers Major Fake GST Racket Using Job Portal to Create Shell Firms
In a significant crackdown, the Central Goods and Services Tax (CGST) authorities in Gurgaon have exposed a large-scale fake GST registration racket. This illicit operation allegedly exploited a job portal as a tool to gather personal documents and establish shell companies for fraudulent activities.
Coordinated Searches and Arrest
The fraud came to light following coordinated searches conducted at multiple premises in Burari, Swaroop Nagar, and Mukundpur in North Delhi. These actions were based on intelligence inputs regarding suspicious GST registrations. Officials tracked the IP addresses used to file these fraudulent registrations, which led them directly to the operational locations of the accused.
On Monday, one individual was arrested under the provisions of the Central Goods and Services Tax Act, 2017. He was produced before the Judicial Magistrate First Class (JMFC) court in Gurgaon. Given the seriousness of the offence, the court remanded him to three days' judicial custody. Officials have refrained from sharing further details about the arrest, as the investigation remains ongoing.
Seizures and Modus Operandi
During the searches, officers seized critical evidence, including phones, laptops, SIM cards, and various documents. Additionally, they recovered Rs 45 lakh from the accused's residence. Probe findings revealed that the accused allegedly used the job portal Job Hai to advertise vacancies for security guard positions.
According to officials, the accused utilized this portal to collect KYC documents from unemployed individuals. When applicants responded, their identity documents were gathered under the pretext of employment verification. Investigators later discovered that these documents were used without the applicants' knowledge to obtain GST registrations and create fake companies.
A CGST official stated that the accused employed forged and misused documents to secure registrations for shell entities that existed only on paper. "These firms were then used to generate invoices without any actual supply of goods or services, enabling fraudulent claims under the GST system," the officer explained.
Scale of the Fraud
So far, investigators have identified 24 fake firms under the CGST Gurgaon jurisdiction. These entities collectively generated fake invoices worth a staggering Rs 734.95 crore. Through these transactions, the accused allegedly availed fraudulent Input Tax Credit (ITC) of Rs 143.05 crore and passed on ITC amounting to Rs 174.72 crore to other entities.
Further investigation has uncovered that the accused applied for registration of approximately 1,400 fake firms, indicating the potential vast scale of this racket. This highlights a systematic attempt to exploit the GST framework for illicit gains.
Understanding Input Tax Credit Fraud
ITC is a core mechanism under the GST regime that allows businesses to claim credit for the tax paid on inputs or purchases and adjust it against the tax payable on their final output. The system is designed to avoid cascading taxation by ensuring that tax is paid only on value addition at each stage of the supply chain.
However, in cases of ITC fraud, shell companies are created to generate fake invoices for transactions that never actually occurred. These invoices are then used by other firms to claim tax credit fraudulently, reducing their tax liability and causing significant losses to the government exchequer. Such networks typically involve multiple entities issuing invoices to each other without any real movement of goods or services.
This case underscores the ongoing challenges in combating GST fraud and the need for vigilant monitoring to protect the integrity of the tax system. Authorities continue to investigate to uncover all involved parties and prevent similar schemes in the future.
