A major racket involving large-scale manipulation of GST invoices and e-way bills has been unearthed in Gorakhpur, with Punjab Police arresting a software engineer accused of creating a parallel fake billing system that enabled tax evasion worth crores of rupees.
The action follows an FIR registered at Mangal police station in Punjab’s Rupnagar district. Acting on the case, a five-member Punjab Police team conducted raids in Gorakhpur on Sunday. Initial searches were carried out in the Ramgarh Tal area, where the accused was believed to be operating. When he was not found at his residence, investigators tracked his local network and detained several associates from the Shahpur area for questioning. Based on the information gathered, the engineer was located and taken into custody later in the evening.
Police sources said the accused, a resident of Vivekpuram in the Taramandal locality, played a central role in developing and operating the fake GST software used in the fraud. He is likely to be taken to Punjab on transit remand for further interrogation.
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Fake software mirrored official GST portal
According to investigators, the engineer had designed a sophisticated software platform that closely replicated the functioning of the official GST portal. Through this system, fraudulent GST invoices and e-way bills were generated to show fake transactions and goods movement. These fabricated documents were then used by various firms to claim input tax credit and evade legitimate GST payments.
Officials said that, on paper, the system reflected the transportation of goods across states, while in reality, no actual trade or supply of goods was taking place. The technology-driven model allowed the accused and his associates to bypass scrutiny and execute high-value tax fraud with minimal risk of detection.
127 shell firms created using identities of poor workers
The investigation further revealed that nearly 127 fake firms had been registered as part of the network. To create these shell companies, the accused and his associates allegedly collected Aadhaar and PAN details of poor labourers and unemployed youths. These individuals were lured with daily-wage payments and false job offers in exchange for their documents.
Once the firms were registered, they were used as fronts for issuing and receiving fake GST invoices. The fraudulent billing was then routed through the fake software to show large-scale business activity, enabling illegal input tax credit claims and massive tax evasion.
Authorities believe that the scam is not limited to Gorakhpur and may have links to similar operations in other states. With the arrest of the engineer, investigators expect more names connected to the racket to emerge.
Further investigation underway
Police and GST authorities are now working together to trace the financial trail of the scam and determine the exact scale of the tax evasion. Digital records and software logs recovered during the operation are being examined to identify beneficiaries of the fake billing system.
Officials said that the arrest marks a significant breakthrough in dismantling the interstate GST fraud network. Additional raids and arrests are expected as the probe expands.
For now, the accused remains in custody and is being questioned regarding the technical structure of the fake portal and the wider network involved in the illegal GST operations.
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.
