New Delhi: The Enforcement Directorate on Monday conducted searches at multiple locations in Uttar Pradesh and Haryana as part of a money laundering investigation linked to an alleged ₹9.63 crore Goods and Services Tax fraud. The searches were carried out under the provisions of the Prevention of Money Laundering Act (PMLA), with investigators focusing on the alleged generation, movement and utilisation of proceeds linked to fraudulent Input Tax Credit (ITC).
According to officials, the ED searched nine premises in Uttar Pradesh’s Muzaffarnagar and Ghaziabad, besides locations in Haryana’s Faridabad. The operation is aimed at tracing the financial trail of the alleged fraud, identifying other individuals or entities that may have benefited from the transactions and securing documentary and digital evidence connected with the suspected network.
Bogus Invoices Used to Generate ITC
The investigation centres on Jambudwip Exports and Imports, which allegedly generated and passed on fraudulent ITC through fabricated invoices and e-way bills without any corresponding movement of goods.
Investigators suspect that the transactions were structured to create the appearance of genuine commercial activity while no actual goods were transported. Such transactions can allow entities to claim or transfer tax credits without undertaking the underlying business activity required for legitimate ITC.
According to the Enforcement Directorate, GST authorities have already established fraudulent availment of ITC amounting to ₹9.63 crore. The alleged transactions resulted in a corresponding loss to the government exchequer.
The ED’s money laundering investigation is now focused on determining how the allegedly fraudulently obtained funds were moved and whether they were subsequently layered through multiple accounts and entities to conceal their origin.
Circular Transactions Under Scanner
Officials said the company allegedly relied on circular transactions involving multiple entities to route funds and create a complex financial trail. Investigators are also examining the role of several entities that are suspected to be bogus or non-existent.
The agency has alleged that funds were transferred through these entities and subsequently withdrawn in cash. The use of multiple layers of transactions and cash withdrawals is being examined as part of the probe into the alleged laundering of proceeds generated through fraudulent ITC claims.
The ED is expected to scrutinise financial records, banking transactions, business documents, invoices, digital communications and other material recovered during the searches. The objective is to establish the complete chain of transactions and identify the persons who allegedly controlled or benefited from the entities involved.
Focus on Other Beneficiaries
The searches are also aimed at identifying additional beneficiaries who may have received or handled the alleged proceeds of crime. Investigators are examining whether the suspected GST fraud was limited to the entities already identified or formed part of a wider network involving multiple businesses.
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The agency is also looking for evidence that could establish the flow of money from the alleged fraudulent ITC transactions to other individuals or companies.
Officials said the searches were conducted to recover documentary and digital evidence relevant to the suspected fraud and money laundering network. The material recovered during the operation is expected to be examined alongside financial and GST records to determine the extent of the alleged irregularities.
Company Yet to Respond
Jambudwip Exports and Imports could not be contacted immediately for its response to the ED searches and the allegations under investigation.
The latest action marks a further step in the money laundering probe arising from the alleged GST fraud. While GST authorities have quantified the suspected fraudulent ITC at ₹9.63 crore, the ED’s investigation is focused on tracing the alleged proceeds of crime and determining whether they were layered, transferred or withdrawn through a network of entities.
The agency’s searches are expected to provide investigators with additional financial and digital evidence as they work to establish the complete money trail and determine the role of the entities and individuals allegedly connected to the transactions.
