Lucknow: The Uttar Pradesh Special Task Force (STF) has busted an inter-state racket involved in GST evasion exceeding ₹100 crore, arresting two key members accused of creating fake firms and generating forged invoices and e-way bills to sell input tax credit (ITC) to genuine companies. The organised fraud caused substantial losses to government revenue.
The arrested accused have been identified as Sandeep Kumar (33), a resident of North Delhi, and Aman Upadhyay (21). They were detained on February 12 during questioning at the STF field unit in Noida. Officials recovered two laptops, three mobile phones, 10 SIM cards, Aadhaar and PAN cards, two rubber stamps, and ₹4,650 in cash from their possession.
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Bogus firms created using fake documents
Investigations revealed that the gang registered shell companies using forged identity documents. These firms issued fake sales invoices and e-way bills without any actual movement of goods, which were uploaded on the GST portal along with fraudulent returns to claim ITC benefits.
The accused routed transactions through bank accounts to create a paper trail and later withdrew the money in cash or circulated it through other fake entities. This circular trading mechanism created the illusion of large-scale business activity on paper while enabling tax evasion.
Network spread across Delhi–NCR
According to STF officials, the racket operated through multiple bogus firms across Delhi and the NCR region, showing fictitious transactions among themselves to inflate turnover and pass on fraudulent ITC worth crores of rupees. Efforts are underway to identify additional firms and beneficiaries linked to the network.
In the existing FIR, sections of the Bharatiya Nyaya Sanhita (BNS), Information Technology Act, and GST Act have been invoked. The arrested accused will be produced before the court, while raids are ongoing to apprehend other absconding members.
Key digital evidence recovered
Forensic examination of the seized laptops and mobile phones has yielded lists of fake firms, bogus invoices, and digital records of bank transactions. Investigators believe this data will help trace other members of the syndicate as well as companies that availed the fraudulent ITC.
Officials said the gang effectively “sold” ITC—providing fake purchase entries to real firms seeking to reduce their tax liability, in exchange for a commission.
Statewide crackdown intensifies
GST fraud cases have surged across Uttar Pradesh in recent months, with joint operations by the STF and tax authorities exposing several large networks. Hundreds of shell firms have been identified and multiple FIRs registered across districts.
The Lucknow case is part of a broader enforcement drive that targets not only fake firms but also beneficiary companies that knowingly availed fraudulent tax credits.
Further investigation and action ahead
The STF is now analysing bank accounts, GST returns, and digital transaction trails to quantify the total evasion and identify financial beneficiaries. Companies found to have claimed fake ITC may face recovery proceedings, penalties, and criminal prosecution.
Inter-state coordination is also underway to track the masterminds and financial controllers behind the racket.
Warning for the GST ecosystem
Experts say invoice-based ITC fraud and circular trading pose a serious challenge to the GST framework. Strengthening data analytics, e-way bill verification, and physical inspections is essential to curb such organised tax evasion.
The STF has reiterated that strict legal action will be taken against all those involved and that recovery of the evaded tax will be ensured. The crackdown signals a tougher enforcement stance against structured GST fraud networks operating across states.
