Ghaziabad: A major Goods and Services Tax (GST) fraud has been unearthed in the Delhi–NCR region, involving the creation of dozens of shell companies to generate fake invoices worth hundreds of crores. The Central Goods & Services Tax (CGST) Department has arrested a Muradnagar-based advocate, Vinay Singh, for allegedly floating 40 bogus firms and issuing fake invoices totalling ₹410 crore, enabling the wrongful availing of ₹73.70 crore in Input Tax Credit (ITC).
Singh was taken into custody under Section 69 of the CGST Act, 2017. Officials said the case points to a “structured, coordinated and high-volume fraudulent ecosystem,” and indicated that further names and beneficiaries are likely to emerge.
Data analytics flagged abnormal patterns: ‘No business, no stock, yet massive turnover on paper’
According to CGST officials, the irregularities were first detected during routine data analytics, which highlighted suspicious billing patterns, unusually high ITC claims and inconsistencies in reported transactions. Based on these red flags, an inquiry was initiated under the supervision of CGST Commissioner Sanjay Lavania, Additional Commissioner Sahil Seth, and Assistant Commissioner Sanjeev Rishi.
The investigation revealed:
- The accused had registered 40 firms under different names, many using forged or misused documents.
- No physical business activity, stock movement or genuine supply chain was found in any of these entities.
- Despite this, invoices worth ₹410 crore were issued solely to facilitate ITC passing.
- Using these fake invoices, the network managed to claim ₹73.70 crore in fraudulent ITC on the GST portal.
Officials said the firms were registered using addresses in Ghaziabad, Noida and Delhi. However, field verification showed that several premises were non-existent, while others had no commercial activity whatsoever.
Accused controlled entire operation — IDs, passwords, OTPs centrally handled
During interrogation, Singh reportedly admitted that he collected identity documents from multiple individuals — some known, some unaware — and used them to register companies without their knowledge.
Key findings disclosed by investigators include:
- The accused had exclusive control over the GST login credentials, including user IDs, passwords and OTPs.
- The individuals in whose names the firms were registered had little or no knowledge of these entities.
- Some people reportedly handed over their documents believing they were applying for government schemes or employment, which were later misused to float companies.
Initial verification found 20 out of 40 firms completely non-operational. The remaining entities failed to produce stock details, books of accounts, GST returns justification, or any evidence of legitimate trade.
Possible corporate beneficiaries under scanner; fake firms acted as ‘dummy suppliers’
Sources indicated that these shell entities operated as dummy suppliers within a larger network. CGST officials suspect that some established businesses may have benefited by routing invoices through these fake units to claim ITC without actual supply.
The department is examining:
- Whether large companies used the fake invoices to inflate purchase records and reduce tax liability.
- If the shell firms acted as pass-through entities, channeling circular or overlapping transactions.
- The role of intermediaries, accountants and possible corporate beneficiaries.
Officials noted that the “depth and financial scale” of the racket indicates a multi-layered structure, and “more arrests are likely.”
Victims of identity misuse: a new pattern of ‘digital identity-based financial fraud’
During field inquiry, several individuals told CGST teams that they were unaware their names had been used to register GST firms. Many insisted they had never owned or operated any business.
According to the department:
- Identity theft appears to be a central element of the fraud.
- Documents submitted for basic purposes — such as welfare applications, local paperwork or job forms — were allegedly misappropriated.
- This reflects a growing trend of digital identity manipulation for high-value tax fraud.
- Officials said the case represents a “significant and emerging risk in GST enforcement.”
Investigation widens; banking trail, portal activity under detailed scrutiny
CGST teams are now examining:
- Bank account trails of all 40 firms
- GST portal login activity
- E-way bill records
- Movement of claimed goods versus actual ground verification
The department hinted that the inquiry may soon expand to Delhi, Haryana and Western Uttar Pradesh, depending on transactional footprints and beneficiary trails.
