Punjab Police, in coordination with local law enforcement in Uttar Pradesh, has detained a software engineer from Gorakhpur in connection with a large-scale Goods and Services Tax (GST) fraud involving forged invoices and fake e-way bills. The action follows a case registered in Rupnagar district of Punjab, where investigators uncovered a sophisticated tax evasion network operating across multiple states.
According to officials, the detained individual is suspected to have played a key technical role in designing and operating software used to generate counterfeit GST invoices and e-way bills. The racket allegedly enabled paper transactions worth several crores without any actual movement of goods, resulting in substantial revenue loss to the exchequer.
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Coordinated raids across Gorakhpur
A five-member team from Punjab Police conducted raids at multiple locations in Gorakhpur on Sunday, acting on intelligence inputs linked to the Rupnagar case. Initial searches in the Ramgarh Tal area did not yield results, prompting investigators to widen the operation.
Police sources said several associates linked to the network were questioned in the Shahpur area. Based on inputs gathered during these interrogations, the technical operator was traced and taken into custody later in the evening.
Officials confirmed that legal formalities are underway to move the accused to Punjab on transit remand for further questioning.
Fake software mimicked official GST portal
Investigators revealed that the fraud network had developed a custom-made software application that closely replicated the interface and workflow of the official GST portal. Using this tool, the accused and his associates allegedly generated forged GST invoices and e-way bills, creating the illusion of legitimate trade activity.
These documents were then used to claim fraudulent input tax credit (ITC) and facilitate circular transactions between shell firms, allowing tax evasion on a large scale.
“The system was designed to evade routine scrutiny by appearing authentic at first glance,” a senior official said, adding that the technical sophistication of the software made detection difficult in the early stages.
Dozens of fake firms created
The investigation has revealed that between 20 and more than 100 fake firms were floated as part of the network. These entities were registered using identity documents belonging to economically vulnerable individuals, including daily-wage workers and unemployed youths.
Officials said Aadhaar and PAN cards were obtained by offering small cash payments, after which the documents were misused to register firms under the GST framework. Most of these entities existed only on paper and had no physical business operations.
Technical role under scrutiny
Authorities believe the detained software engineer was central to the technical backbone of the operation, handling software development, system maintenance and digital execution of the fraud. Investigators expect that further questioning may reveal additional operatives involved in financial management, firm registration and document procurement.
Police have indicated that more detentions are likely as the network’s full scope is mapped.
Focus on inter-state GST fraud
The case highlights the growing challenge of technology-driven tax fraud, where digital tools are misused to exploit gaps in compliance systems. Officials said the investigation is now focused on tracing transaction trails, identifying beneficiary accounts and quantifying the total revenue loss.
Punjab Police officials stated that coordination with GST intelligence units and cyber forensic teams has been intensified to dismantle the entire network.
Broader implications
Tax officials and investigators note that the case underscores the need for stronger backend verification, enhanced data analytics and closer monitoring of newly registered GST firms. The use of cloned software and identity misuse has emerged as a significant threat to indirect tax administration.
As the probe expands, authorities have reiterated that those involved—whether in technical execution or logistical support—will face strict legal action.
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.
