Economic Fraud
GST Officer and Lawyers Arrested in Rs 718 Crore Fake Invoice Scam Involving 500 Shell Companies
In a significant breakthrough, a complex Goods and Services Tax (GST) fraud involving a rogue tax officer, three lawyers, and a network of 500 fake companies has been uncovered in Delhi. The scam, which defrauded the government of Rs 54 crore through fake invoices and GST refunds, was exposed by the Anti-Corruption Bureau (ACB) of the Delhi Government.
New Delhi – In a massive GST fraud case, a corrupt tax officer and a trio of lawyers masterminded a scam that siphoned off Rs 54 crore from the Goods and Service Tax (GST) Department. The conspiracy, which also involved two transporters and a fake company owner, revolved around the creation of 500 fake companies and the generation of fraudulent invoices worth a staggering Rs 718 crore. This fraudulent activity was aimed at claiming GST refunds on non-existent businesses.
The key architect behind this intricate scam was Babita Sharma, a GST officer (GSTO). Sharma, in collaboration with 96 fake firms, approved over 400 refund claims amounting to ₹35.51 crore between 2021 and 2022. Initially, only refunds worth ₹7 lakh were processed, but the pace quickly escalated as the scam unfolded.
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The scheme started to unravel when over 50 firms applied for a jurisdictional transfer from Ward 6 to Ward 22 of the GST office shortly after Sharma’s transfer to the new ward. The unusual volume of transfer requests raised alarm bells within the GST Vigilance Department, prompting them to dispatch teams to investigate the legitimacy of these firms. It was soon discovered that these companies existed only on paper, with no actual business operations.
The fake companies generated invoices worth Rs 718 crore for bogus purchases and business activities that existed solely on paper. These transactions were used to falsely claim Input Tax Credit (ITC) and subsequently secure GST refunds. Alarmingly, over 40 of these firms reported supplying goods in the initial phase but failed to provide any records during the second phase of the investigation.
Further investigation revealed that of the 53 firms that migrated to Ward 22 under Babita Sharma’s jurisdiction, 48 received GST refunds totaling Rs 12.32 crore. These firms prepared Non-Objection Certificates (NOCs) between July 26 and July 27, 2021, just after Sharma’s transfer. The probe also exposed that the bank accounts of the three lawyers involved—Rajat, Mukesh, and Narendra Saini—were used to funnel these fraudulent GST refunds. Astonishingly, over 1,000 bank accounts were directly linked to these fake firms, their family members, and their employees.
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The scale of the operation was further highlighted when it was revealed that the trio of lawyers managed 23 fake firms using just one email ID and mobile number, even generating multiple GST registration numbers using the same PAN and email ID. These 23 companies were responsible for issuing fake invoices worth Rs 173 crore, with seven of them falsely claiming to be involved in the supply of medical goods.
The uncovering of this scam is a stark reminder of the vulnerabilities within the GST system, particularly in the verification process. The ACB’s investigation has not only exposed the deep-rooted corruption within the GST department but also highlighted the urgent need for stricter regulatory oversight to prevent such fraudulent activities. With the arrest of key individuals involved, including the lawyers and transporters, the case now serves as a significant step towards bringing the perpetrators of such large-scale financial frauds to justice.
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