New Delhi: The Enforcement Directorate (ED) on Tuesday carried out simultaneous search operations across multiple states in connection with a massive ₹658-crore fake Input Tax Credit (ITC) scam, exposing a well-organised network of 58 shell companies allegedly involved in generating bogus invoices without any actual supply of goods or services.
According to official sources, the raids were conducted at several locations in Jharkhand, Manipur and West Bengal (Kolkata), among other places. Teams searched premises linked to suspected individuals and entities, scrutinising documents and digital evidence. The agency said the case ranks among the major GST frauds detected in recent years, causing substantial loss to the exchequer.
Operation Led by Itanagar Unit
The multi-state operation is being led by the ED’s Itanagar unit, with assistance from local police and other investigating agencies. Officials said coordinated searches were planned to dismantle the inter-state network in one go. The focus of the investigation is to trace how fake ITC was generated and how the funds were routed and layered.
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Fake Invoices Without Actual Supply
Investigators found that the accused entities allegedly raised fake invoices without any real movement of goods or services, using them to illegally claim ITC. Such practices not only amount to tax evasion but are also commonly used for money laundering, officials said. Preliminary findings suggest extensive use of shell companies to project fictitious transactions as legitimate business activity.
Case Originated From FIR in Itanagar
The probe stems from an FIR registered in Itanagar, Arunachal Pradesh, in which several individuals were booked for criminal conspiracy, cheating and forgery. Following the initial police investigation, the case was handed over to the ED, which began a probe under the Prevention of Money Laundering Act (PMLA).
Non-Existent Firm at the Centre of the Scam
According to the complaint, the fraud was allegedly executed through a firm named M/s Siddhi Vinayak Trade Merchants. Investigators claim the entity generated fake invoices worth ₹658.55 crore, on the basis of which about ₹99.31 crore in ITC was availed. However, apart from paper records, the firm was found to have no physical existence on the ground.
58 Shell Companies Across States
The ED has identified 58 shell companies registered in different states, which were allegedly used to rotate and transfer fake ITC through layered transactions. The agency is now examining bank accounts, identifying directors and tracing the ultimate beneficiaries linked to these entities.
Tracing Proceeds of Crime
The ED is currently focused on tracking the proceeds of crime generated through the fake ITC claims. Officials said the money was allegedly routed through multiple layers to disguise its origin and project it as legitimate funds. The agency indicated that the scope of the investigation is likely to expand further, with more actions and disclosures expected in the coming days.
