The Crime Branch has uncovered an organised racket involved in evading Goods and Services Tax (GST) worth ₹2.66 crore by floating bogus firms and fabricating trade transactions on paper. The gang allegedly created fake companies to show non-existent purchase and sale of goods, using forged invoices and e-way bills to illegally claim input tax credit (ITC). Two accused — an accountant linked to a GST lawyer and a trader — have been arrested, while efforts are on to trace the kingpin and other members of the network.
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Investigators said the racket had links across multiple states. The accused allegedly used a fake trading firm registered in Kanpur to show paper transactions with companies based in Chhattisgarh and Maharashtra. No physical movement of goods ever took place, but documents were generated to project large-scale commercial activity, resulting in substantial loss to the exchequer.
The case surfaced after the state tax department lodged a complaint in July 2025 against Apurva Trading Company, registered at Meharban Singh Ka Purwa, under the Kalyanpur police station limits. The complaint alleged cheating, forgery and related offences. According to the FIR, the firm showed fake supply of goods to Raav Agro Industries and Jagdev Industries in Chhattisgarh by generating forged invoices and e-way bills. Similar bogus purchase and sales entries were shown with Nada Traders in Maharashtra.
During the investigation, authorities found that these paper transactions were used to evade GST amounting to ₹2,54,21,914, while penalties worth ₹12,71,090 were also bypassed. Acting on a complaint forwarded by the Chhattisgarh state tax commissioner, the GST headquarters in Lucknow ordered a detailed probe. The investigation revealed that Apurva Trading Company had no real business operations and existed solely on paper.
Crime Branch officials said the gang followed a fixed payment structure to keep the operation running. During interrogation, arrested accused Kamal Gaurav Sahu disclosed that the kingpin paid him ₹50,000 for setting up each bogus firm. Fake invoices and billing documents were prepared by accountant Etisham Hussain, who was paid ₹500 per bill. Using this method, the gang created multiple shell entities and showed fictitious turnover running into crores.
Kamal Gaurav Sahu, a resident of Barra Adarsh Nagar, was initially detained by the Crime Branch. Based on information provided by him, the police arrested accountant Etisham Hussain, a resident of Rawatpur. Further questioning revealed that Kamal’s relative Rakesh Sahu was allegedly operating as the mastermind, coordinating the creation of fake firms and overseeing the documentation trail while remaining behind the scenes.
Senior Crime Branch officials stated that nearly 20 similar GST evasion cases are currently under scrutiny. Investigators suspect that the gang’s operations were not limited to Kanpur alone and that similar bogus firms may have been floated in other districts and states to siphon off tax revenue using the same modus operandi.
Police said several crucial documents, forged firm records and digital data have been seized from the accused. These materials are being sent for forensic examination to identify the full scale of the fraud and establish links with other shell entities. Officials indicated that the total amount of tax evasion could rise further as the investigation progresses.
Raids are continuing to trace and arrest the main accused Rakesh Sahu and other absconding members of the gang. Investigators believe more names could emerge as financial trails are analysed and digital evidence is decoded. The Crime Branch has also alerted tax authorities to tighten scrutiny of suspicious GST registrations and high-value ITC claims to prevent similar frauds in the future.
About the author – Ayesha Aayat is a law student and contributor covering cybercrime, online frauds, and digital safety concerns. Her writing aims to raise awareness about evolving cyber threats and legal responses.
