Bengaluru. The Enforcement Wing (South Zone) of the Commercial Taxes Department, Government of Karnataka, has busted a large inter-state fake Input Tax Credit (ITC) scam involving suspicious transactions worth around ₹410 crore. The main accused, Mohammed Tauqeer alias Mohammad, has been arrested, while his associate, Shaik Jakeer Hussain alias Basha, remains absconding.
Officials said the racket operated through a highly structured network of shell companies that generated fake invoices and claimed ITC without any actual supply of goods or services. The fraudulent mechanism resulted in an estimated loss of ₹102.5 crore to the government exchequer.
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Shell companies and fake billing are at the core of the operation
Investigations revealed that the accused created multiple fake entities across different states and obtained GST registrations under these firms. Fake invoices were then generated without any real trade activity and circulated through a chain of entities to fraudulently claim tax credits.
Authorities noted that the network operated across multiple layers to conceal the true nature of transactions. Each layer acted independently, making it difficult for enforcement agencies to detect the full scale of the fraud in the initial stages.
Officials further stated that GST registrations, mobile numbers, and bank accounts were frequently changed to avoid tracking. This constant rotation of identities helped the syndicate maintain a complex financial web that evaded scrutiny.
Network spread across three states
The scam was not confined to Karnataka alone but extended across Andhra Pradesh and Tamil Nadu as well. The accused used entities operating in these states to circulate fake invoices and route fraudulent tax credits through a coordinated chain.
Investigators found that different individuals handled different parts of the operation—some were responsible for creating shell companies, others for generating fake documentation, while the remaining participants facilitated the transfer of tax credits across entities.
Arrest following surveillance operation
After sustained surveillance and intelligence gathering, the main accused Mohammed Tauqeer was arrested in Bengaluru while allegedly attempting to flee. He was produced before the Special Court for Economic Offences and has been remanded to 14 days of judicial custody.
His associate, Shaik Jakeer Hussain, is currently absconding and is suspected of having fled abroad. Authorities are exploring legal channels and international cooperation mechanisms to trace him.
Organised and technologically driven fraud
Officials described the operation as highly organised and technologically sophisticated. The syndicate used digital records, fake banking transactions, and layered corporate structures to create a complex financial system that closely resembled legitimate business activity.
Each participant operated in a defined role, making the entire setup appear like a genuine commercial ecosystem, while in reality it functioned as a coordinated fraud mechanism.
Significant revenue loss and ongoing probe
The fraudulent activities resulted in substantial loss to the government exchequer, with wrongful ITC claims alone estimated at ₹102.5 crore. Authorities are now examining the complete financial flow, bank records, and digital trails linked to the network.
Investigators believe this may only be a part of a larger operation, with the possibility of additional interconnected networks operating across states.
The probe is ongoing, with efforts intensified to trace the absconding accused and identify other individuals involved in the wider syndicate.
