The Central Goods and Services Tax department has uncovered an alleged fake firms network in Varanasi and arrested businessman Mahesh Gupta, a resident of Kachhwa in Mirzapur, in connection with a GST fraud estimated at approximately ₹5.97 crore.
Officials alleged that the accused fraudulently claimed Input Tax Credit without any actual supply of goods or genuine business activity. The arrest was made from the Makkbool Alam Road area after the accused had reportedly been under surveillance for a considerable period.
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Fake Firms Created Using Identity Documents
During the investigation, authorities found that the accused allegedly used PAN and Aadhaar details of economically weaker individuals to register multiple fake firms. Officials said these documents were allegedly obtained by luring people with monetary benefits.
The firms were allegedly used to generate fraudulent invoices and fictitious transactions. Investigators said none of the entities were involved in real commercial activity or physical movement of goods.
Verification of business addresses revealed that most of the firms did not exist at the declared locations. In several cases, individuals whose names were used in registrations reportedly told investigators that their identity documents had been misused without their knowledge or consent.
₹5.49 Crore Fake ITC Claim Detected
The investigation revealed that approximately ₹5.49 crore in fraudulent Input Tax Credit was claimed through paper-based transactions. Officials also found that fake billing was allegedly used to route around ₹5.57 crore in wrongful benefits to different entities.
CGST officials said the findings indicate a network-based fraud involving fabricated documentation and financial routing through bank accounts. The case is being treated as more than a routine tax discrepancy due to the structured nature of the alleged operation.
Early analysis suggests that the arrested businessman was the primary beneficiary of the scheme. Officials said the alleged fraud caused significant revenue loss to the government through transactions that existed only on paper.
Bank Records and Digital Trails Under Review
The accused was produced before the CJM court, but police remand was not granted. He was later sent to the Cantonment police station, where further interrogation is underway.
Investigators are now examining bank records, financial transactions, fund flow patterns, digital records and e-invoicing data to reconstruct the full transaction chain. Authorities are also reviewing additional bank accounts and financial documents linked to the alleged fake firms network.
Officials said more individuals may be connected to the case, as the creation and operation of fake firms appear to involve several intermediaries. A special team has been formed to investigate the suspected organised tax evasion racket, and further arrests have not been ruled out.
