Police have arrested three Delhi-based men for allegedly transferring ₹16.42 crore to companies in other states by fraudulently claiming inflated input tax credit (ITC) through a bogus billing network. The accused — Yogendra Singh Fartiyal of Kalyanpuri, Nishant Dargan of Hari Nagar and Himanshu Kumar of Rajouri Garden — were produced before a court and remanded to judicial custody.
Bogus Billing Network Exploits GST ITC
The arrests followed a complaint lodged by the state tax department, which flagged suspicious ITC claims linked to a firm identified as Sarv Ali Inter College Prizes GSTIN. According to investigators, the accused used the entity to project exaggerated ITC figures and route funds to beneficiary firms outside the state, allegedly without corresponding supply of goods or services.
Fabricated Invoices Create False Paper Trail
Preliminary findings indicate that fabricated invoices were generated to create a paper trail of transactions. These invoices were then used to claim input tax credit far in excess of legitimate entitlement. The inflated credit was subsequently adjusted against tax liabilities and the corresponding amounts were transferred to firms operating in other states, investigators said.
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Multi-Layer Transactions Hide Fraud Trail
Police said the operation appeared to be part of a structured financial scheme designed to exploit gaps in GST compliance monitoring. The accused allegedly created multiple layers of transactions to avoid immediate detection and to disperse the funds across different accounts.
During searches conducted at premises linked to the trio in Delhi, police seized two laptops and three mobile phones. The devices have been sent for forensic examination to retrieve financial records, digital invoices, communication logs and account details that may establish the money trail. Officials suspect that additional entities and individuals may have been involved in facilitating the transactions.
Forensic Probe Targets Larger Network
Investigators are examining bank account statements, GST filings and transaction histories to determine how long the alleged racket had been operational and whether the ₹16.42 crore figure represents the total amount involved or only a part of a larger diversion. Authorities are also coordinating with tax officials in other states to identify recipient firms and assess potential tax evasion.
Sources said the accused were identified after discrepancies surfaced during routine scrutiny of GST returns. A detailed financial analysis reportedly revealed inconsistencies between declared business activity and claimed tax credits. The complaint triggered a criminal investigation under relevant provisions of law dealing with cheating, forgery and financial fraud.
Police are probing whether shell companies were floated to receive the funds and whether the beneficiary firms were operational businesses or merely paper entities. Investigators are also verifying if similar ITC claims were made in previous assessment periods.
The accused have not publicly commented on the allegations. Police said further custodial interrogation may be sought if required after examining the digital evidence.
Authorities have reiterated that misuse of input tax credit mechanisms not only results in substantial revenue loss but also distorts fair trade practices. The case underscores increased scrutiny of GST filings and coordinated enforcement efforts to curb fraudulent credit claims.
Further investigation is underway to trace additional links in the suspected ITC fraud network and to quantify the full extent of the financial impact.
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.
