A major GST fraud involving a non-existent firm operating on paper from a Civil Lines address has come to light, with authorities booking the proprietor for allegedly causing a revenue loss of ₹1.97 crore. The case was detected during a departmental probe by the Special Investigation Branch (SIB) of the state tax department, which found that the registered business did not exist at the declared location.
According to the complaint filed by a senior clerk of the SIB, an online application for GST registration was submitted on November 4, 2025, in the name of Ayush Kumar Rai, who listed his address as Sikandarpur in Ballia district. The firm, Balaji Enterprises, was registered for trading in utensils, with its principal place of business shown on the Gorakhpur-Varanasi road in Civil Lines, Azamgarh. A power bill was uploaded as proof of address during the registration process.
After obtaining registration, the firm declared large-scale transactions and reported supplies worth ₹10.98 crore in the financial year 2025-26, generating a GST liability of ₹1.97 crore. However, subsequent verification by the SIB revealed that no such firm was functioning at the declared premises. The mobile number provided during registration was found switched off, and physical inspection confirmed that no business activity had ever taken place at the site.
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Further scrutiny of the electricity bill used for registration showed that the connection number belonged to Deoria district and was issued in the name of another individual, indicating that forged or unrelated documents were used to obtain GST credentials. Officials termed the case a serious financial irregularity involving fraudulent registration, fake turnover declaration and tax evasion.
Investigators suspect that the bogus entity may have been used either to claim fraudulent input tax credit or to pass on fake invoices without actual supply of goods. Such shell firms are commonly deployed in GST fraud networks to inflate turnover on paper, manipulate tax liabilities and cause substantial losses to the exchequer.
Following the findings, a formal complaint was lodged at the City Kotwali police station, and an FIR has been registered against Ayush Kumar Rai under relevant sections for cheating, forgery and tax evasion. Police said they are examining bank accounts, GST returns, invoice trails and digital footprints to trace the flow of funds and identify possible accomplices.
Officials are also investigating whether the firm issued fake invoices to other businesses to facilitate input tax credit claims, which could indicate a wider network of linked entities. The role of intermediaries involved in preparing the registration documents and uploading credentials is under scrutiny.
Tax authorities noted that the misuse of fabricated address proofs and disconnected contact numbers reflects a pattern seen in organised GST fraud, where shell firms are created with minimal documentation and abandoned once scrutiny begins. The department has initiated parallel action to block the GST identification number and prevent further misuse.
Police said efforts are underway to locate the accused and verify his financial transactions. The investigation will also determine whether similar registrations were obtained using the same identity or documents in other districts.
The case underscores the continuing challenge faced by tax authorities in detecting paper firms that exploit online registration systems. Officials indicated that stricter physical verification, data analytics and inter-district coordination will be stepped up to curb such fraudulent entities.
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.
