MEERUT: Authorities say a network of fictitious firms fabricated nearly 70 crore rupees in transactions, claiming fraudulent tax credits and costing the government an estimated 7 crore rupees in lost revenue.
An Investigation Begins in Bahu
In the northern Indian state of Punjab, a routine case registered at the Bahu police station has led to the arrest of two men accused of orchestrating a large-scale goods and services tax, or GST, fraud involving fabricated firms and falsified financial records.
According to officials from the Meerut Crime Branch, the investigation uncovered what they described as a “well-organized” scheme to create shell companies and simulate business activity on paper. Through these entities, authorities allege, the accused generated nearly 69 crore 99 lakh rupees in fictitious transactions, enabling fraudulent claims of input tax credit and tax refunds.
The case was initiated after authorities began examining irregularities in GST filings. The inquiry, led in part by C.O. Sucheta Singh, revealed patterns of transactions that investigators said bore the hallmarks of coordinated financial manipulation.
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Arrests in Mandi Govindgarh
The two accused — Gurdeep Singh and Dharmendra Kumar, both residents of Fatehgarh Sahib district in Punjab — were arrested on February 19, 2026. Police said the arrests were carried out at an office located on Amloh Road in Mandi Govindgarh, following information provided by an informant and verification of their location.
Officials allege that the men created multiple bogus companies using fraudulent Aadhaar and PAN details. Through these entities, they are said to have issued fake invoices without any actual supply of goods or services. Investigators contend that these invoices were then used to claim input tax credit (ITC), thereby reducing tax liability.
Police further stated that the accused manipulated GST returns by underreporting sales while inflating tax credits. In some cases, forged e-way bills were prepared to support nonexistent transactions. Authorities also allege that exports were falsely shown in documentation to claim GST refunds.
In addition, investigators said the accused engaged in circular trading — a practice in which firms trade invoices among themselves without the movement of goods, creating the appearance of legitimate business activity while generating tax credits.
Digital Evidence and Seized Devices
During the arrests, police seized two laptops and four mobile phones from the accused. According to officials, digital evidence from these devices is being secured and examined as part of the ongoing investigation.
The devices are believed to contain records of transactions, company registrations and communications linked to the network of firms. Police said the inquiry is now focused on identifying other companies and potential associates connected to the alleged scheme.
Authorities have not disclosed how long the operation had been active but indicated that the financial scale of the transactions suggests sustained activity.
The Financial Impact and Ongoing Inquiry
Officials estimate that the alleged fraud caused a revenue loss of approximately 7 crore rupees to the government. The total value of the fictitious transactions, however, is said to be nearly 70 crore rupees.
C.O. Sucheta Singh confirmed that further legal proceedings are underway. Police are continuing to question the accused and are examining whether additional individuals or entities were involved in facilitating the creation and operation of the shell companies.
As investigators expand their inquiry, the case underscores the complexities of enforcing compliance within India’s GST framework, where digital filings and invoice-based credits can be exploited through coordinated documentation schemes.
For now, authorities say the investigation remains active, with digital forensics and financial tracing expected to play a central role in determining the full scope of the alleged fraud.
