New Delhi. Investigative agencies have arrested Kapil Chugh, the alleged mastermind of a GST refund fraud estimated at around ₹1,518 crore in Gujarat. Officials said he was held at Indira Gandhi International Airport in Delhi on April 19, 2026, after arriving from Dubai, following allegations that he operated a network of fake input tax credit claims and fraudulent export-linked transactions.
Fake Invoices Used to Claim GST Refunds
According to officials, the alleged fraud was built around fabricated purchase and sale invoices. High-value commodities, particularly tobacco products, were reportedly shown as part of supply chains even though there was no actual movement of goods.
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These fictitious transactions were allegedly used to generate input tax credits, which were then claimed as GST refunds from the government. Investigators said the operation caused substantial loss to government revenue and is now being examined across multiple states.
Shell Companies and Dummy Employees Under Scanner
Authorities said the network functioned through shell entities, dummy employees and coordinated associates. These companies allegedly existed largely on paper and were linked through layered transactions to create the appearance of genuine commercial activity.
Investigators said the network handled several stages of the GST compliance cycle, including registrations, invoice generation, banking operations and return filing. The system was allegedly designed to bypass routine scrutiny and allow fraudulent claims to pass through verification checks.
Wider Economic Crime Network Being Probed
Officials alleged that Chugh worked closely with an associate, Vipin Sharma, in managing operational and financial aspects of the network. Investigators suspect that several intermediaries and linked entities may have helped move funds and process documentation.
Authorities also stated that Chugh had previously been associated with other economic offence cases, including an alleged ₹110 crore bank fraud under investigation by central agencies. Multiple summons were issued during the GST probe, but he allegedly failed to appear and did not cooperate.
Investigators are now preparing for detailed interrogation and mapping the wider network of shell companies, associates and financial transactions. Officials indicated that further arrests are possible as the probe expands into additional suspects and linked entities.
