In a significant crackdown on tax evasion, the CGST Delhi South Commissionerate has unearthed a massive fake GST Input Tax Credit (ITC) fraud worth approximately Rs. 7.85 crore. A chartered accountant has been arrested for orchestrating this elaborate scam involving fake GST claims and circular trading.
Key Details of the GST Fraud
Following a detailed investigation, officials discovered the misuse of over 80 GSTINs (Goods and Services Tax Identification Numbers), largely concentrated in the Palam and Dwarka regions of Delhi. These GST registrations were linked to common email addresses and mobile numbers controlled by the chartered accountant.
A core cluster of 31 GSTINs was found to be engaging in circular trading, where fake invoices were generated without any actual supply of goods or services. This fraudulent activity allowed the creation of fake ITC claims, undermining the integrity of the GST framework.
Search Operations and Evidence Seizure
The CGST department conducted searches across 12 premises, many of which turned out to be either non-operational or entirely fictitious entities. During the raids, electronic devices and key documents were seized to aid the ongoing investigation.
Multiple taxpayers whose GST returns were filed by the accused admitted that they had fully relied on the CA for GST compliance, including managing credentials and making all filings on their behalf. This level of dependency enabled the misuse of GSTINs for illicit gains.
Legal Action and Arrest Under CGST Act
The accused chartered accountant has confessed to the fraudulent activities under Sections 132(1)(b) and 132(1)(c) of the CGST Act, 2017. These sections pertain to issuing invoices without actual supply of goods/services and availing fraudulent ITC—both recognized as serious, non-bailable offenses under Section 132(5) and punishable under Section 132(1)(i).
He was arrested under Section 69(1) of the CGST Act and presented before the duty magistrate on May 6, 2025, who subsequently remanded him to judicial custody for 14 days, until May 21, 2025.
Ongoing Investigation into GST ITC Fraud
The case highlights a concerning trend of identity misuse, fake firm creation, and collusive circular trading to fraudulently claim input tax credits. The investigation is still underway to uncover the full scope of the scam and identify all individuals involved.
The CGST Delhi South Commissionerate has reaffirmed its commitment to combat GST evasion and protect the integrity of the tax system, sending a strong message against such financial crimes.