The Directorate General of GST Intelligence (DGGI) has made a significant breakthrough in a major tax evasion case, arresting the managing partner of a Hyderabad-based telecommunications company for allegedly orchestrating a fraudulent Input Tax Credit (ITC) claim worth ₹5.83 crore.
Key Arrests in Multi-Crore Scam
DN Srinivasa Reddy, the managing partner of Sri Progressive Projects, was taken into custody by the Visakhapatnam zonal unit of the DGGI. Following his arrest, he was presented before a court and remanded to judicial custody on Saturday. This arrest is part of a wider probe that earlier saw the apprehension of his associate, Mallikarjuna Manoj Kumar, from Hyderabad on December 22. Kumar was subsequently remanded to judicial custody in Visakhapatnam the following day.
Modus Operandi: Fake Invoices and Shell Firms
Investigators revealed that the fraud was executed through a sophisticated network of non-existent firms. According to DGGI officials, Reddy, a resident of Hyderabad, fraudulently availed the substantial input tax credit based on invoices issued by bogus companies with addresses in Telangana and Andhra Pradesh. These firms never supplied any goods or services to his company.
The scheme operated under the guise of subcontracting arrangements. A dummy entity, controlled by associate Mallikarjuna Manoj Kumar, was used to generate a series of fake invoices. Kumar allegedly retained a three per cent commission from the illicit proceeds. The remaining funds were then funneled through a complex web of mule bank accounts to conceal the money trail.
Legal Repercussions and DGGI's Crackdown
Reddy has been booked under Section 132(1)(c) of the Central GST Act, 2017, which categorizes fraudulent ITC claims as cognisable and non-bailable offences. His arrest was formally executed under Section 69 of the CGST Act.
This operation marks the fifth arrest secured by the Visakhapatnam unit of the DGGI in the current financial year, underscoring the agency's intensified crackdown on organized tax evasion networks. The case highlights the continued efforts by tax authorities to identify and dismantle schemes that defraud the national exchequer through fabricated documentation and shell entities.
