DELHI: A sprawling network of shell companies, forged identities and layered financial transactions has come under scrutiny in Delhi, where tax officials say they have uncovered one of the most intricate input tax credit frauds in recent years. What began as a tip-off about suspicious GST registrations has widened into a probe touching political entities, NGOs and hundreds of dummy firms.
A Coordinated Network Built on Paper Firms
Delhi’s zonal unit of the Directorate General of GST Intelligence (DGGI) says it has dismantled a vast infrastructure of fraudulent input tax credit (ITC) generation, allegedly orchestrated through 229 shell companies created solely to simulate business activity. According to officials, the syndicate issued invoices without any movement of goods or provision of services, enabling illicit claims of ITC amounting to roughly ₹645 crore.
The operation began after credible intelligence flagged unusual patterns in GST registrations across the capital. Acting on the alert, multiple search teams fanned out across Delhi, unearthing a trove of digital and physical records—mobile phones, ledger books, signature devices, and hundreds of cheque books—believed to have been the operational backbone of the scheme.
Initial findings suggest the entities were part of a tightly-run network set up to mimic legitimate commerce on paper while quietly draining the national exchequer.
Unpacking the Infrastructure of Fraud
During the searches, officers recovered 162 mobile phones believed to have been used for generating OTPs linked to GST filings and banking transactions. They also seized 44 digital signature certificates and more than 200 cheque books connected to firms that investigators say existed only in documentation.
Officials describe an assembly-line model: shell firms were created using fabricated or rented identities, GST registrations were obtained, bank accounts were opened, and invoices were issued to other linked entities. This allowed the syndicate to rotate funds, obscure their origin, and pass fraudulent ITC across layers of dummy companies.
DGGI personnel say the meticulous record-keeping—spanning devices, forged signatures, and multiple financial trails—suggests the operation was designed for longevity, not quick extraction.
The Man Accused of Orchestrating the Scheme
Investigators have identified Mukesh Sharma as the alleged mastermind behind the operation. Evidence gathered during the raids points to his role in managing registrations, filing GST returns for the dummy companies, controlling associated banking activities, and coordinating the movement of funds through multiple layers.
According to DGGI, Sharma also maintained the records of several firms, ensuring that invoices appeared legitimate despite there being no underlying business. His arrest on November 11, under Sections 132(1)(b) and 132(1)(c) of the Central GST Act, classifies the offences as cognizable and non-bailable. He has been remanded to judicial custody.
Officials say his position in the network allowed him to choreograph the financial choreography required to keep hundreds of phantom firms running in parallel.
Trails Leading Beyond Tax Fraud
As investigators traced the flow of money, a second layer of activity emerged. DGGI officials indicated that proceeds from the racket may have been diverted through an NGO and a political outfit, potentially to obscure the origin of funds or finance parallel activities. While authorities have not attributed wrongdoing to the entities themselves, the involvement of these channels has widened the scope of the inquiry.
Financial trails, digital footprints and connections to additional individuals are now being examined. More arrests are expected as teams analyse the large volume of material seized during the coordinated raids.
