Moradabad: A major GST fraud case has surfaced in the police station area, where a fake scrap trading business was allegedly used to commit tax evasion worth ₹2.55 crore through bogus bill trading and fraudulent input tax credit (ITC) claims. The case has been registered after a formal complaint from the State Tax (GST) department, and police have initiated a detailed investigation.
Firm Registration Raises Suspicion
According to officials, the accused Ravi, a resident of Mohalla Khushhalpur Gurudwara Nanak Darbar Gali No. 5 in Bank Colony, had registered a firm named “MS National Traders” on 17 September 2022. The firm was shown as engaged in trading electrical aluminium scrap, old batteries, and other scrap materials. However, during inspection, authorities found that no actual business activity was being conducted at the declared address.
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Turnover, Tax Liability and Fake Invoices Under Scrutiny
Investigations revealed that the firm had shown a suspicious turnover of ₹4,10,04,059 (approximately ₹4.10 crore), which raised immediate red flags with tax officials. Based on this declared turnover, authorities calculated a tax liability of ₹2,55,97,495, including CGST, SGST, and penalty components. Officials allege that this liability arose due to fake billing and fraudulent ITC claims generated without any real purchase or sale transactions.
The State Tax Department stated that the accused and his associates systematically created fake invoices to inflate turnover and illegally claim input tax credit. These credits were then allegedly passed on through a network of shell entities, enabling tax evasion and wrongful financial gains. The entire operation is suspected to be part of a broader fake billing racket operating across multiple regions.
Probe Expands Into Wider Billing Network
Officials further noted that the firm’s registration details and declared business operations did not match ground reality. No stock, storage facility, transport records, or supplier verification could be established during inspection. This mismatch between documentation and physical verification led investigators to conclude that the business was fictitious in nature.
Following the complaint filed by the Deputy Commissioner of the GST department, Mझोला police registered a case against Ravi and unidentified associates under charges of cheating, forgery, and related sections of the law. Senior police officials confirmed that further investigation is underway to identify additional members involved in the racket and trace the flow of fraudulent transactions.
Police and Tax Department Deepen Investigation
Authorities suspect that such fake billing networks operate by creating multiple dummy firms, generating circular transactions, and using forged invoices to inflate turnover. These networks often exploit gaps in GST compliance systems and use layered transactions to obscure financial trails. Officials are also examining whether the accused had links with other shell companies operating in nearby districts.
The tax department is currently analyzing digital records, bank transactions, GST filings, and invoice chains to reconstruct the full extent of the fraud. Preliminary findings suggest that multiple invoices may have been generated without actual movement of goods, indicating a structured and coordinated tax evasion scheme.
Police have stated that the accused Ravi and his associates will be questioned in detail regarding the creation of the firm, source of invoices, and beneficiaries of the fake ITC claims. Authorities are also exploring whether the fraud extends beyond ₹2.55 crore, as investigations continue to expand.
Officials emphasized that such GST frauds not only cause direct revenue loss to the government but also disrupt fair market competition by allowing fake entities to undercut legitimate businesses. The case remains under active investigation, and more arrests are likely as financial and digital evidence is being thoroughly examined.
