The Central GST Delhi South Commissionerate has arrested a Chartered Accountant (CA) for orchestrating a massive scam involving fake firms and circular trading to fraudulently claim ₹7.85 crore in Input Tax Credit (ITC). According to the Ministry of Finance, the accused has been sent to judicial custody till May 21, 2025, following an order from the Duty Magistrate.
Investigators revealed that over 80 bogus GST Identification Numbers (GSTINs), largely registered in Delhi’s Palam and Dwarka areas, were tied to the CA’s email IDs and mobile numbers. A concentrated set of 31 GSTINs formed a core network falsely claiming ITC without any actual business activity or supply of goods or services.
Authorities discovered that many of these firms were never operational. During search operations across 12 locations, officials seized electronic evidence, forged documents, and business credentials, shedding light on an intricate nexus of fraudulent tax practices.
Systemic Loopholes and Outsourced Control
What began as a probe into fake invoices soon revealed a troubling pattern: multiple businesses had entirely outsourced their GST compliance responsibilities to the arrested CA. This included sharing of login credentials, access to GST filings, and complete operational control—practices that allowed him to manipulate records, create fake transactions, and perpetuate circular trading.
Taxpayers, either unaware or complicit, had enabled an ecosystem vulnerable to misuse. “This case shows how GST compliance delegation without oversight can result in systemic fraud,” an official familiar with the investigation said.
The Ministry of Finance, in a public statement, emphasized the larger implications of this case:
“The case demonstrates large-scale misuse of the GST framework through impersonation, misuse of credentials, and collusive circular trading.”
Enforcement Response and Policy Implications
Officials invoked relevant provisions of the CGST Act, 2017 and confirmed that further efforts are underway to trace beneficiaries of the illegitimate ITC claims. This includes firms that knowingly or unknowingly participated in the scheme by filing fake invoices.
The incident has renewed calls for stricter oversight, secure credential management, and enhanced digital authentication in the GST ecosystem. Authorities are advising businesses to practice due diligence while outsourcing compliance to third parties and are pushing for greater public awareness regarding GST-related cyber fraud and impersonation risks.
This crackdown is seen as a part of the government’s larger strategy to curb tax evasion and reinforce the integrity of India’s indirect tax system.