Bahraich: A major and well-organized Goods and Services Tax (GST) evasion racket has been exposed in Bahraich, where fake firms and forged invoices were used to siphon off approximately ₹10.23 crore in tax revenue. Investigators have arrested two accused—Shubham Gupta and Nek Alam—who allegedly created bogus companies to fraudulently claim Input Tax Credit (ITC).
According to preliminary findings, the accused systematically registered multiple shell firms and used them to show fictitious business transactions on paper. Without any actual trade activity, fake invoices were generated and GST returns were filed on the official portal, enabling them to wrongfully avail ITC benefits. This fabricated chain of transactions was further extended to other firms, amplifying the scale of tax evasion and causing significant losses to the exchequer.
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Crores siphoned off through fake billing network
The investigation revealed that firms such as Meena Enterprises, Chhail Traders, and Ratan Enterprises were used as fronts to generate large volumes of fake invoices. These documents created an illusion of legitimate trade while facilitating tax evasion on a massive scale. Officials noted that the entire operation was meticulously planned, with multiple layers designed to make the paper transactions appear authentic.
Fake addresses, forged identity documents, and multiple bank accounts were used to sustain the racket. The accused routed fictitious sales and purchases between different entities, passing on fraudulent ITC benefits across the network. This continuous circulation of fake credits resulted in sustained revenue losses over time.
Signs of a wider organized network emerge
During interrogation, both accused reportedly admitted to deliberately setting up fake firms and conducting paper-based transactions. Investigators suspect that the racket extends beyond the two individuals and may involve several other associates operating across districts.
Sources indicate that this is not an isolated case of tax evasion but part of a larger, organized syndicate specializing in GST fraud. Authorities are now examining whether similar patterns exist in other regions and identifying additional individuals linked to the network.
Key documents and devices seized during arrests
At the time of arrest, officials recovered several crucial items from the accused, including fake invoices, a laptop, mobile phones, Aadhaar cards, PAN cards, driving licenses, and multiple ATM cards. A motorcycle allegedly used in the operation was also seized.
These physical and digital evidences are now being analyzed to trace the complete chain of transactions and identify other beneficiaries of the fraudulent ITC claims. Technical examination of devices is expected to reveal further links and operational details of the network.
Significant loss to government revenue
Authorities estimate that the fraud has caused a loss of ₹10,23,66,540 to the government treasury. This figure is based on initial findings, and officials believe the total loss could increase as deeper scrutiny of financial records continues.
Experts emphasize that such misuse of GST provisions through fake billing and shell entities constitutes a serious economic offence. Beyond immediate financial losses, such scams undermine the credibility and efficiency of the taxation system.
Further arrests likely as probe continues
Both accused are currently in custody and being interrogated. Investigators have indicated that efforts are underway to identify other individuals connected to the racket, and more arrests are expected in the coming days.
The case highlights the growing sophistication of tax evasion methods and the challenges faced by authorities in curbing organized financial crimes. As the investigation progresses, more revelations are anticipated, which could expose the full extent of this fraudulent network.
