Varanasi: The Sarnath police in Uttar Pradesh’s Varanasi have arrested two more people from Punjab’s Ludhiana in connection with an alleged tax evasion and fraud case involving fake GST firms.
The accused include a chartered accountant and an accountant. Police said digital evidence linked to their mobile phones and WhatsApp chats indicated their alleged involvement in the case. Their signatures were reportedly found on documents related to eight fake firms. With these arrests, the total number of people arrested in the case has risen to four.
The arrested accused have been identified as Raviprakash Pal, a chartered accountant and resident of Azad Nagar in the Daba area near Peepal Chowk in Ludhiana, and Vikas Gupta, an accountant residing in Gaspura on Lohara Road in the same area. Police recovered two mobile phones allegedly used in the offence from their possession. The two were summoned to Varanasi for questioning and subsequently arrested after investigators found evidence pointing to their alleged involvement. Police are now working to identify other people connected to the suspected fraud network.
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Case Registered on April 8
A case was registered at Sarnath police station on April 8 following a complaint by Arunendra Prasad, Deputy Commissioner of the State Tax Department. The complaint alleged that fake GST firms had been created using other people’s identities and forged documents. These firms were allegedly used to generate bogus invoices, evade taxes and improperly transfer input tax credit (ITC) to other businesses.
Following the initial findings, the police and the State Tax Department intensified their investigation. Investigators examined suspicious GST registrations, billing records, identity documents and bank accounts allegedly linked to the transactions. According to the police, the suspected activities went beyond the creation of fictitious firms, as the entities were allegedly used to facilitate the transfer of ITC to other businesses without legitimate underlying transactions.
Police said two accused had been arrested earlier in the case. The signatures of Pal and Gupta, who were arrested on Saturday, were reportedly found on documents associated with eight fake firms. The investigation has indicated alleged tax evasion of approximately ₹50 lakh. Investigators suspect that several other people may also have been involved and are examining the financial transactions and connections between the entities.
Fake Firm Registered at an Address in Bareipur
The investigation revealed that a GST registration had allegedly been obtained using forged documents and the address of a house in Bareipur, within the Sarnath area. The firm was registered under the name M/s APS Enterprises. However, according to the investigation, the business did not actually exist.
Despite this, substantial business transactions were reportedly shown in the firm’s records, and the entity was allegedly used to pass input tax credit to other firms. The State Tax Department’s investigation found that sales worth ₹22.94 crore were reported in the firm’s name between April 2024 and March 2025. During the same period, approximately ₹50 lakh in ITC was allegedly transferred to other firms.
Investigators are examining which businesses and individuals were involved in these transactions and how the alleged fake billing arrangement operated. They are also attempting to establish the beneficiaries of the ITC transfers and determine whether the transactions were supported by genuine supplies of goods or services.
House Owner Alleges Misuse of Identity Documents
The property used for the firm’s registration reportedly belongs to Amit Srivastava. His electricity bill was allegedly used to obtain GST registration for the fictitious business.
Srivastava has claimed that he did not share his Aadhaar card, PAN card, mobile number or one-time password (OTP) with anyone. Despite this, a fake firm was allegedly registered using his property’s address and subsequently used for tax evasion.
The alleged misuse of another person’s address and identity documents has emerged as an important aspect of the investigation. Such fraudulent registrations can expose property owners and individuals to unnecessary legal and financial complications. Police and tax officials are trying to establish who collected the documents, how the registration application was submitted and who operated the firm’s accounts and transactions.
Police Investigating Wider Network
The Sarnath police suspect that additional individuals may have played a role in the alleged fraud. Investigators are analysing documents related to the fake firms, billing records, mobile phones and digital communications to establish the full extent of the network.
They are also examining whether the firms that allegedly received input tax credit were aware of the suspected fraudulent transactions or were themselves part of the arrangement.
Police have indicated that further action will be taken against other individuals if their involvement is established during the investigation. For now, questioning of the arrested accused and analysis of digital evidence are underway to trace the financial links and identify others allegedly connected to the tax evasion case.
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