Varanasi. The Special Investigation Branch (SIB) of the State Tax Department has uncovered a GST evasion case involving railway contractor-linked Bhagirathi Construction, with tax irregularities estimated at ₹4.25 crore. The investigation found that the firm allegedly claimed input tax credit (ITC) worth ₹2.88 crore without making actual purchases and obtained another ₹36 lakh in ITC on the basis of allegedly fake invoices. The department is now examining whether a wider network of shell companies and firms involved in fraudulent billing is connected to the case.
One of the most significant findings is that the GST registration of the firm’s tent-house business was cancelled in March 2026. Despite the cancellation, Bhagirathi Construction continued to receive government payments of around ₹5.50 crore between April and August 2026. According to the investigation, nearly ₹1 crore in tax arising from these transactions was not deposited with the government. The continued processing of government payments and bills despite the cancellation of registration has also raised questions about the verification process involved in clearing the contractor’s bills.
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Bhagirathi Construction was involved not only in civil construction work but also in supplying manpower through the Government e-Marketplace (GeM). The investigation found that the firm did not fully disclose its manpower supply business in its GST returns for the financial year 2025-26. Furthermore, no GST return was filed after April in the financial year 2026-27, even though the firm continued its business activities and received government payments.
The SIB investigation also uncovered serious irregularities related to ITC claims. According to the department, the firm claimed ₹2.88 crore in ITC without any corresponding actual purchases. In addition, ₹36 lakh in ITC was allegedly availed against invoices that were found to be fake during the investigation. Officials are now examining the transactions and firms that issued the invoices. The department suspects that a wider investigation into firms involved in manpower and cleaning services could reveal further large-scale tax irregularities.
Another issue emerged in connection with the firm’s tent-house business. According to the department, the business remained active despite the cancellation of its GST registration. The investigation has detected undeclared sales worth around ₹2.50 crore dating back to financial year 2022-23. Officials are examining the documents, transactions and tax liabilities associated with this undisclosed turnover.
During the SIB action, the contractor deposited ₹46.64 lakh. The firm has also assured the department that the remaining outstanding amount will be deposited soon. However, the investigation is still underway, with officials examining the source of the ITC claims and the transaction links between the firm and other businesses.
Manoj Kumar Singh, Joint Commissioner, SIB, said investigations into such firms were underway. According to him, Bhagirathi Construction was continuing its business activities, but returns related to its tent-house business had not been filed for several months. The GST registration was therefore cancelled in March. He said no application had been submitted by the proprietor for revocation of the cancellation.
Meanwhile, Rajesh Kumar, Public Relations Officer of Banaras Locomotive Works (BLW), said that any irregularities found in the GST affairs of the firms were a matter for the GST Department to act upon and that BLW had no role in the matter.
The investigation is now likely to examine not only Bhagirathi Construction but also its suppliers, invoice-issuing firms and the entire chain of ITC transactions. If the probe establishes the involvement of fake billing or shell companies, the authorities may also examine the complete trail of government payments and tax credits linked to the transactions.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
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