In a major breakthrough in a tax evasion case involving fake firms and paper transactions, police have arrested an accused from Punjab in connection with a ₹4.31 crore Input Tax Credit (ITC) fraud. The investigation has revealed that crores worth of supplies were shown through fraudulent billing without any actual business activity, enabling illegal tax benefits.
The arrested accused has been identified as Suraj Verma, a resident of Govindgarh in Fatehgarh Sahib, Punjab. His associate, Mohd. Farhan, had already been arrested earlier in the case. Both are alleged to have orchestrated the scam using a shell firm to manipulate the GST system.
Fake firm used as a front
The मामला came to light after a complaint was filed by the state tax department, which flagged irregularities in a firm named ‘Singh Enterprises’, registered under GST in the Sarnath area. During physical verification, the firm was found non-existent at its declared address.
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Further investigation revealed that the entity was merely a paper firm created to facilitate fake transactions. In May 2025 alone, the firm reportedly showed outward supplies worth around ₹21.49 crore by issuing invoices to multiple firms across states, despite no actual goods or services being exchanged.
₹4.31 crore ITC passed on illegally
On the basis of these fake transactions, five firms located in Ludhiana, Delhi, and Ahmedabad availed wrongful ITC benefits amounting to approximately ₹4.31 crore. This resulted in a direct loss to government revenue.
Investigators also found that the accused had earlier attempted to obtain fake GST registrations using forged documents, indicating a well-planned and ongoing operation.
Arrest in Punjab, wider network under probe
Acting swiftly, police traced and arrested Suraj Verma from Punjab. He has been sent to judicial custody. Authorities are now working to identify other members of the network and trace the full extent of the operation.
Officials believe that more individuals, including intermediaries and document forgers, could be involved in facilitating such fraudulent transactions.
Separate arrest in investment fraud case
In a related development, another accused, Santosh Kishan Sapkale, director of Aastha International Limited, has been arrested from Surat in connection with a ₹3.61 crore cheating case. He is accused of luring investors by promising to double their money within five years.
The accused had reportedly set up an office in Varanasi to attract investors and collect funds under false pretenses. A reward of ₹25,000 had been declared for his arrest, and he is expected to be brought to Varanasi for further legal proceedings.
Strong message on tax compliance
Experts note that cases involving fake ITC claims and paper transactions have seen a sharp rise in recent years. Such frauds not only impact government revenue but also distort fair competition for genuine businesses.
The action is being viewed as a strong signal that authorities are tightening enforcement against tax evasion. Officials have reiterated that strict action will continue against those found exploiting loopholes in the system.
The case highlights that even with increasing digitization and transparency in tax systems, new methods of fraud continue to emerge, requiring constant vigilance and robust enforcement mechanisms.
