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Key Points

The DGGI Bengaluru unit has busted a major GST fraud involving six shell companies generating fake invoices worth Rs 266 crore. A chartered accountant mastermind was arrested for orchestrating the scam through circular trading and fake ITC claims. The fraud also impacted investors as one shell company was listed on the stock exchange. Authorities have shared findings with SEBI to prevent similar scams in listed firms.

Key Points: DGGI Bengaluru Uncovers Rs 266 Crore GST Fraud Involving Shell Companies

  • DGGI Bengaluru uncovers Rs 266 crore fraudulent invoices in Delhi raids
  • Shell companies used circular trading to inflate turnover
  • CA mastermind arrested for managing fake ITC claims
  • Fraudulent companies listed on stock exchange risk investor funds
2 min read

DGGI Bengaluru Unit uncovers six shell companies with fraudulent invoices worth Rs 266 crore

Bengaluru DGGI exposes Rs 266 crore GST fraud via shell companies, arrests mastermind CA involved in fake ITC claims and circular trading.

"The mastermind floated shell companies with no actual business activity and indulged in ITC fraud. – Ministry of Finance"

New Delhi, July 11

In a follow up operation connected with investigation of a case initiated in Bengaluru, the officers of Directorate General of GST Intelligence, Bengaluru Zonal Unit, carried out searches in over six premises in Delhi, and uncovered fraudulent invoices worth over Rs 266 crore, involving availment and passing on of fraudulent Input Tax Credit (ITC) of Rs 48 crore from the shell companies.

The Ministry of Finance, in a statement, stated that the masterminds floated shell companies with no actual business activity, carried out circular trading to inflate turnover, listed one of the companies in the stock exchange and indulged in ITC fraud.

Investigation revealed that four companies, with no business activity, have shown receipt of hundreds of crores worth of goods and services, the Finance Ministry statement stated.

The investigation indicated that initially, the key mastermind was one of the CA/statutory auditors, who managed the transactions of these companies, the statement added.

Further investigation revealed that the structure of entities and shareholding pattern, along with changes in the same, the CA/statutory auditor was acting as Director in a few of these shell companies at some point of time - clearly establishing the links behind the origin of the six shell companies.

The Ministry's statement further added that during searches at the premises of these companies, original documents, such as invoices and seals, were found in the premises of the mastermind.

According to the Ministry, the key mastermind of the case has been arrested.

DGGI Bengaluru Zonal Unit has initiated a comprehensive investigation into this fraud, which has implications for innocent investors in listed companies.

Having found such pattern of GST frauds by use of circular trading and fake ITC by listed companies, DGGI has shared specific inputs with SEBI in the recent past for initiating action under the SEBI Act, the Ministry's statement added.

- ANI

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Reader Comments

S
Sarah B
As an NRI investor, this worries me deeply. How can we trust Indian markets when such frauds happen? SEBI needs to take stronger action against listed companies involved in such activities.
A
Ananya R
Rs 266 crore?! This is daylight robbery of public money. The government should name and shame all involved, including the CA. Common taxpayers like us suffer because of such fraudsters.
V
Vikram M
While I appreciate the investigation, why does it always take so long to uncover such scams? The system needs more proactive checks rather than reactive investigations.
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Kavya N
This is just the tip of the iceberg! So many small businesses suffer because of such frauds that make GST compliance harder for honest taxpayers. Hope the punishment sets an example.
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Michael C
The involvement of a CA is particularly disturbing. This profession is supposed to maintain financial integrity. The ICAI should take strict disciplinary action beyond just legal consequences.
P
Priya S
Good work by DGGI, but I hope this doesn't become another case where the big fish escape and only small players get caught. The entire network needs to be dismantled.

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