Moradabad’s State Tax Department has uncovered a massive GST evasion racket operating under the guise of timber trade. The investigation revealed that 12 fake firms were registered using a single mobile number, and together they were involved in issuing bogus invoices to fraudulently claim ₹8.60 crore worth of Input Tax Credit (ITC) on a fake turnover of ₹67 crore. A detailed report has been sent to the CGST Commissioner for further action.
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Three Timber-Laden Trucks Seized — Fraud Chain Begins to Unravel
The case surfaced when the department’s mobile squad intercepted three trucks loaded with timber during routine checking. On verifying the documents and questioning the drivers, officers learned that the consignment was billed to Zara Enterprises, a Sitapur-based firm.
A preliminary check of the GST portal raised immediate suspicion. When officers examined Zara Enterprises’ GST registration and trading records in detail, a shocking pattern emerged—the mobile number linked to Zara Enterprises was also used to register 12 separate firms, none of which had legitimate business activity.
Further scrutiny showed that the timber purchases recorded by Zara Enterprises were shown as being sourced from two other Sitapur-based firms. However, both firms lacked any trace of real commercial operations.
Trail Leads to Gorakhpur — No Evidence of Actual Timber Trade
As investigators followed the purchase chain further, they found that the Sitapur firms had recorded purchases from yet another firm, this time located in Gorakhpur. But when the department’s team inspected the location, they discovered there was no genuine timber business happening there either—no warehouse, no machinery, no workers, and no corresponding banking activity.
This exposed a three-district fake billing network spanning Moradabad, Sitapur and Gorakhpur, where bogus transactions were created solely on paper to pass fraudulent ITC worth crores of rupees.
Classic Pattern of Bogus Firms: Multiple Registrations, Zero Real Activity
According to senior officials, the entire setup follows a typical modus operandi used in GST fraud:
- Multiple firms registered using a single mobile number
- Fake addresses and mismatched documentation
- No physical business infrastructure
- Huge paper turnover but negligible banking transactions
- No labour, machinery or transport records
- Invoices circulating only to pass on ITC
Officers said that the firms, despite showing crores of rupees in purchases and sales, lacked even the basic elements of a legitimate business. This clearly indicates that the entire network was created purely for bogus billing and fraudulent ITC claims.
Hunt for Mastermind Begins; Major Action Expected
The State Tax Department has submitted a comprehensive report to the CGST Commissioner. Preliminary findings suggest that this network is part of a larger organised racket that creates shell companies across districts to facilitate GST evasion.
The upcoming action may include:
- Summoning and interrogation of the registered firm owners
- Identifying those who facilitated fake GST registrations
- Forensic audit of bank accounts and invoice chains
- Investigation to trace the mastermind controlling the network
Officials believe that the exposed ₹8.60 crore fraud might be just the beginning and the evasion amount could rise as the probe deepens.
