DGGI Discovers 93 Fake Firms in ₹491 Crore GST Fraud Scheme

DGGI Gurugram Uncovers Network of 93 Fake Firms Involved in ₹491 Crore Fraud

The Gurugram Zonal Unit (GZU) of the Directorate General of GST Intelligence (DGGI) has successfully apprehended an individual on January 18, 2022, under the provisions of the Goods and Services Tax (GST) Act. This arrest stems from allegations of operating multiple fictitious firms using fraudulent documents, resulting in the illicit passing of Input Tax Credit (ITC) amounting to ₹491 crore.

Investigation Background

The action was initiated following specific intelligence from the Jaipur Zonal Unit of DGGI, which indicated that an individual was providing cloud storage services to various parties across India. These services facilitated remote work and data storage. A subsequent examination of data from the hard disk recovered from this cloud service provider revealed the identity of a key operative believed to be orchestrating a web of 93 fake firms.

During the searches conducted on January 18, 2022, it was discovered that many of these firms did not exist at the addresses provided. The principal operative, who was utilizing the cloud storage service to manage these fictitious entities, was apprehended in Hansi, Haryana, on the same day.

Admission of Fraud and Legal Implications

Upon investigation, the apprehended individual confessed to orchestrating the fraudulent activities in collaboration with accomplices. Evidence collected through verifications and recorded statements indicated that he was integral to the operations of this fraud, which involved the creation of fake firms and the issuance of invoices without genuine supply of goods. This activity directly led to the passing of fraudulent and inadmissible ITC values totaling ₹491 crore, constituting violations of several provisions under the CGST Act, 2017.

Consequently, the individual was arrested on January 18, 2022, and subsequently remanded to 14 days of judicial custody as ordered by the Duty Magistrate.

Ongoing Investigation

The investigation into this case continues as DGGI works to uncover further details surrounding the network of fake firms and their operations.