Greater Noida. A major case of alleged misuse of input tax credit (ITC) through bogus companies has come to light in Greater Noida’s Dankaur area, involving a construction company registered in the region. Following an investigation, the Uttar Pradesh State Tax Department’s Gautam Buddh Nagar Zone has recovered ₹64.28 crore from the company’s bank account. According to the department, tax-related irregularities amounting to around ₹70 crore were detected, while the process of recovering the remaining nearly ₹6 crore is underway.
The departmental investigation found that the company’s turnover had increased abnormally during the previous year. Investigators suspected that the sharp rise was not supported by genuine purchases and sales of goods but was instead created through paper transactions and allegedly fake invoices. Following the initial findings, officials examined the company’s tax records, purchase and sales documents and transactions involving firms connected to the business.
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The investigation revealed that the company had allegedly shown purchases and sales of goods through five to six suspected bogus firms and claimed input tax credit on the basis of these transactions. The department did not find sufficient evidence of actual supply of goods behind several of the transactions. Investigators suspect that an artificial business trail was created through invoices and that the company used these transactions to claim ITC and reduce its tax liability.
Officials also raised questions about the company’s financial transactions during the investigation. The department reportedly did not find adequate records to establish that the company had deposited the required tax or other payable amounts in cash during the relevant period. This prompted officials to intensify scrutiny of the company’s bank accounts and related financial transactions.
Joint Commissioner Sanjay Kumar Kushwaha said the company was allegedly taking undue benefit of ITC in the name of sub-construction activities. He said an 18% Goods and Services Tax (GST) applies to firms involved in construction-related work and that ITC cannot be legitimately claimed merely on the basis of invoices without actual supply of goods or services. Acting on the investigation findings, the department recovered ₹64.28 crore from the company’s bank account.
The action is not limited to the construction company. Officials are also examining the data and transactions of the firms through which the company had allegedly shown purchases and sales. Their registrations, business activities, invoices, banking transactions and tax records are being cross-checked. If the alleged irregularities are confirmed, the department may initiate action against the related firms as well.
Tax experts said cases involving fraudulent ITC often involve a chain of paper transactions between multiple entities. One company may show a purchase based on an invoice, while another records the same transaction as a sale. In this way, tax credit can allegedly be claimed without any actual movement of goods. Investigators generally examine bank transactions, e-way bills, GST returns and invoices to determine whether the transactions correspond to genuine business activity.
Following the detection of the case in the Gautam Buddh Nagar Zone, the department has expanded its scrutiny of data related to businesses and firms connected with the suspected transactions. Officials are analysing transaction patterns to determine whether other companies may have used a similar mechanism to claim fraudulent ITC.
The department is now working to recover the remaining amount of nearly ₹6 crore. At the same time, the role of the five to six suspected firms identified during the investigation is being examined closely. If transactions involving fake invoices and the absence of actual supply are established, the investigation could expand beyond the construction company and uncover a wider tax-evasion network operating through multiple entities.
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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.
