In a major case of tax evasion detected in Bareilly, Uttar Pradesh, state tax authorities have uncovered a large-scale fake GST supply racket, involving bogus transactions worth nearly ₹38 crore. During the probe, officials also found that the firm had illegally passed on Input Tax Credit (ITC) worth ₹6.88 crore to other entities. Following the findings, an FIR has been registered and further investigation is underway.
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Fake Supplies Detected During GST Scrutiny
The case came to light during a routine scrutiny of GST returns by the State Tax Department. Officials noticed suspicious entries in the returns filed by Servashree Nag Enterprises, a firm registered in Bareilly. For the month of December 2025, the company declared outward supplies amounting to approximately ₹38 crore, but no corresponding purchases were shown in its records.
Upon physical verification, the tax department found that the firm had no warehouse, no stock, and no evidence of actual business operations. There was also no transport documentation to support the alleged movement of goods. These findings indicated that the supplies existed only on paper and were created to manipulate the GST system.
₹6.88 Crore ITC Passed Using Bogus Invoices
Further investigation revealed that the firm had generated fake invoices to illegally pass on ₹6.88 crore worth of ITC to three firms based in Kolkata, West Bengal. Under the GST framework, ITC can be claimed only when genuine goods or services are supplied. In this case, no actual transactions took place.
By creating a chain of fake invoices, the accused firm enabled beneficiary companies to reduce their tax liability without paying any real tax to the government. Officials described the operation as a classic fake invoice and ITC fraud, which causes significant revenue loss to the exchequer.
FIR Registered Against Firm and Proprietor
Following the confirmation of fraud, the Assistant Commissioner (State Tax) lodged an FIR at the Cantonment Police Station in Bareilly. The complaint names Servashree Nag Enterprises and its proprietor Nitesh Kumar, a resident of Kadharpur Umarasia Road, Bareilly.
The FIR has been registered under relevant provisions of the Indian Penal Code and the GST Act, dealing with cheating, forgery, and tax evasion. Police officials confirmed that an investigation is underway and further legal action will depend on the evidence collected during the probe.
Authorities Step Up Action Against GST Fraud
Tax officials stated that such cases highlight the growing challenge of fake firms and bogus ITC claims under the GST regime. Across the country, enforcement agencies have detected thousands of fake entities involved in similar frauds, prompting stricter monitoring through data analytics, e-way bill verification, and physical inspections.
Officials reiterated that strong action would be taken against those misusing the GST system and that genuine businesses should not be affected by such illegal practices.
About the author – Rehan Khan is a law student and legal journalist with a keen interest in cybercrime, digital fraud, and emerging technology laws. He writes on the intersection of law, cybersecurity, and online safety, focusing on developments that impact individuals and institutions in India.
