Lucknow – The state tax department has uncovered another major GST fraud, revealing that six firms registered in Lucknow misused fake invoices and shell companies to evade ₹60.48 crore in taxes. Separate FIRs have been filed against each firm, their GST registrations are being canceled, and bank accounts have been ordered to be frozen.
Fraud Spreads Across Five States
Preliminary investigations indicate that while these firms listed their main business addresses in Rajajipuram, Fatehganj, and LDA Colony, no actual operations existed at these locations.
The shell companies’ network extended beyond Uttar Pradesh to Punjab, Maharashtra, Haryana, Gujarat, and Telangana, forming what authorities describe as a multi-state bogus GST syndicate, operated primarily out of Lucknow.
Paper Transactions, No Real Business
According to tax officials, the firms uploaded false invoices on the GST portal and claimed input tax credit (ITC) without any genuine supply of goods.
Several firms engaged in paper-based transactions with one another, creating a chain of tax evasion. Officials confirmed that none of the firms had actual production or sales activity—transactions existed only on paper.
Rotating Invoices Fuel the Scam
Investigators found that the firms rotated invoices with shell companies across different states.
“Each firm claimed input tax credit from another’s invoice, creating a loop of fraudulent trading.”
said a senior state tax official.
This invoice rotation network allowed the syndicate to exploit the GST system digitally, generating substantial tax credits without moving any goods.
State Tax Department Cracks Down
The department has taken a strict stance, citing a “Zero Tolerance” policy toward such schemes.
“All bank accounts of the implicated firms have been frozen, and GST registrations canceled. Forensic investigations are ongoing to identify the ultimate beneficiaries.”
The official added.
The case is also being coordinated with the Directorate General of GST Intelligence (DGGI) and other central agencies to trace the network’s masterminds.
Analysis: Bogus Firm Syndicates and the New Face of GST Fraud
Experts note that while GST digitization has improved transparency, it has also been exploited by sophisticated bogus firm syndicates, which operate entirely on paper transactions.
The Lucknow case highlights a new multi-state model of tax fraud, where physical goods are absent, but invoices circulate to create artificial tax benefits.
