In a major breakthrough, the Uttar Pradesh State Tax Department and the Special Investigation Team (SIT) have exposed one of India’s largest-ever GST evasion rackets, involving ₹989 crore in tax fraud and ₹5,478 crore in fictitious turnover generated through 335 shell companies.
The investigation gained momentum after the arrest of Meerut-based mastermind Ikhlaq, whose diary turned out to be the most crucial piece of evidence, detailing hundreds of firms used to execute the nationwide fraud.
Authorities have described the case as a highly organised economic crime with deep inter-state links.
Ikhlaq’s seized diary revealed 535 firms; 200 found inactive
Following Ikhlaq’s arrest, SIT officers recovered a diary containing names and mobile numbers linked to 535 firms. Once the document was shared with the State Tax Department, teams initiated parallel data verification across GST records, call logs and registration databases.
The scrutiny revealed that 200 firms were completely inactive with no sign of genuine trade. However, the remaining 335 firms were actively used under the ‘AK Enterprises’ network to generate massive fake turnover through bogus billing and fraudulent Input Tax Credit (ITC) claims.
Officials confirmed that these firms had been quietly operating across multiple states for several years.
Strongest links traced to Delhi and Gujarat
The investigation has uncovered the deepest connections in Delhi and Gujarat, where several shell companies were allegedly used to facilitate tax evasion on a large scale.
According to senior officers, multiple Gujarat-based companies engaged in real business allegedly leveraged these fake firms to camouflage purchases and illicitly claim ITC.
A top State Tax officer, Additional Commissioner Grade-1 remarked:
“This is a coordinated and well-structured GST fraud network with national-level penetration. The confirmed tax evasion stands at ₹989 crore so far.”
126 firms linked to CGST, 87 to SGST; email trails exposed 22 more companies
Additional Commissioner Grade-2 R.A. Seth revealed that during the first round of scrutiny, 122 firms connected to AK Enterprises were identified. Subsequently, email trails and digital footprints exposed 22 additional shell firms.
In the broader analysis:
- 126 companies were registered under CGST
- 87 companies were registered under SGST
Several of the firms were registered using forged documents, fake identities, or mobile numbers issued in bulk by a single operator. Many individuals in whose names the companies were registered were unaware of such filings.
Probe triggered by two trucks; ₹400-crore fraud ballooned into ₹989 crore
The entire operation unfolded after the seizure of two trucks loaded with iron on October 24–25 in Moradabad. Verification of the accompanying documents revealed a startling fact—144 shell firms were registered using just two mobile numbers, collectively involved in ₹400 crore GST fraud.
Two FIRs were subsequently filed, prompting the formation of a SIT. In the investigation that followed, the SIT apprehended Ikhlaq and his associate Ittehat Alam alias Danish Kabadi. Their records, especially the diary, expanded the fraud estimate to ₹989 crore.
At least six members of the network remain absconding.
Nationwide tax-fraud ecosystem—authorities vow complete dismantling
Officials say this case represents just one layer of a much larger ecosystem of tax fraud across India. The network relied on:
- Fake GST registrations
- Shell entities
- Bogus purchase–sale transactions
- Inflated or fabricated billing
- Large-scale ITC manipulation
Additional Commissioner Singh asserted,
“This is not an isolated case. We are dealing with a widespread, multi-state GST fraud infrastructure. The network will be dismantled completely. More major disclosures are expected.”
