Varanasi: A major financial scam linked to Goods and Services Tax (GST) evasion has been uncovered in Varanasi, where authorities estimate a tax fraud of over ₹12 crore. In a joint operation, the main accused has been arrested from Punjab, exposing a well-organised network allegedly operating through fake identities and fictitious business addresses.
According to investigators, the entire racket functioned through a series of shell companies that existed only on paper. These firms were registered at addresses where no actual commercial activity was found. Using these fake entities, fraudulent GST returns were filed to generate bogus transactions and illegally claim Input Tax Credit (ITC), causing significant loss to the exchequer.
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Main Accused Arrested from Punjab
The arrested accused, identified as Pankaj Kumar, is a resident of the Barnala district in Punjab. He had been absconding for several months and was wanted in two separate cases registered in Varanasi. Acting on technical surveillance and intelligence inputs, a coordinated team tracked him down and arrested him in Punjab after sustained efforts.
Officials said the network was operating in a highly structured and planned manner. The accused allegedly floated multiple companies on paper, including one named “Sunshine Enterprises,” and used them to generate fake invoices without any actual movement of goods or services. These forged documents were then circulated to show fake business transactions and claim illegal tax benefits.
Fraud Estimate May Rise as Probe Expands
Investigations further revealed that the fake invoices were used not only within the network but were also passed on to several other companies, enabling them to wrongly avail tax credits. This resulted in substantial financial losses to the government treasury. Initial estimates suggest the scam exceeds ₹12 crore, though officials believe the figure may increase as the investigation progresses.
Authorities stated that the case was formally registered on April 8 following which a detailed probe was launched. During the investigation, multiple suspicious transactions, financial inconsistencies, and digital records came to light, strengthening suspicions of a wider conspiracy. Based on these findings, efforts to trace the accused were intensified.
Investigators Suspect Wider Network
Sources indicate that investigators suspect the involvement of several other individuals who may have played key roles in managing the fake firms and facilitating financial transactions. The scope of the investigation has now been expanded to identify the full network and uncover additional beneficiaries of the fraud.
Officials also noted that cases involving fake GST firms have been rising in recent years, with fraudsters increasingly using forged documents, fake addresses, and digital platforms to manipulate the tax system. Such operations often rely on layered transactions designed to conceal the movement of illegal funds and evade detection.
At present, the accused is being interrogated, and his mobile data, bank records, and communication details are under intensive scrutiny. Investigators believe that further analysis may reveal deeper links to other individuals and entities involved in the racket.The probe is ongoing, and officials have indicated that more arrests cannot be ruled out as evidence continues to emerge.
