In a major crackdown on financial fraud, the commercial taxes department of Karnataka, in a coordinated operation with Tamil Nadu officials, has unearthed a massive interstate fake invoice racket involving a staggering Rs 1,464 crore. The department announced the bust on Sunday, January 4, 2026, leading to the arrest of four individuals across the two states.
Simultaneous Raids Across Two States
Acting on specific intelligence regarding suspicious activities linked to the Goods and Services Tax (GST), officials conducted simultaneous searches at multiple locations. Raids were carried out in Bengaluru, Chennai, Vellore, and Pernampattu. The operation targeted a sophisticated network accused of generating fraudulent business transactions without any real movement of goods.
The modus operandi involved creating fake inward and outward supply transactions for commodities like cement, iron and steel, and other building materials. By using forged documents, the racket illegally availed and passed on input tax credit (ITC), causing significant revenue loss to the exchequer.
Key Arrests and Seizures
During the raids, authorities made crucial arrests and seized substantial evidence. In Pernampattu, Tamil Nadu, two brothers identified as Irbaz Ahmed and Nafiz Ahmed were taken into custody. They are alleged to have floated several bogus firms, including Trion Traders, Wonder Traders, Royal Traders, and Galaxy Enterprises.
In Bengaluru, Karnataka, the arrests included Eddala Pratap and Revati. They are accused of creating shell entities with names such as Power Steel and Cement, P.R. Construction, S.V. Traders, and S.R.S. Cement Steel Traders to facilitate the fraud.
The evidence collected from the raid sites is substantial and includes:
- 24 mobile phones
- 51 SIM cards
- Two pen drives
- Multiple bank statements
- Several rubber stamps of different business entities
Legal Proceedings and Ongoing Investigation
All four accused were produced before a special court for economic offences in Bengaluru. The court has remanded them to judicial custody for 14 days as the investigation deepens. The scale of the scam, pegged at Rs 1,464 crore, highlights the challenges authorities face in curbing GST-related frauds that exploit the input tax credit mechanism.
This bust underscores the continued vigilance of tax departments in cracking down on organized financial crime. It also serves as a warning to those attempting to defraud the system through fake invoices and shell companies. The inter-state cooperation between Karnataka and Tamil Nadu officials has been pivotal in bringing this extensive network to light.
