DGGI’s Crackdown: Exposing Fake ITC Syndicates and Apprehending Tax Evaders

Introduction

In an ongoing battle against fraudulent Input Tax Credit (ITC) activities, the Directorate General of GST Intelligence (DGGI) has intensified its efforts, resulting in significant breakthroughs. Utilizing advanced data analysis tools, the DGGI has uncovered elaborate schemes orchestrated by tax evaders, leading to the detection of 1,700 cases involving a staggering sum of Rs. 18,000 crore during the Financial Year 2023-24. Furthermore, the apprehension of 98 culprits, including masterminds, underscores the agency’s commitment to combat tax evasion.

Sophisticated Tactics of Tax Syndicates:

Tax syndicates employ sophisticated tactics, often exploiting unsuspecting individuals by enticing them with job opportunities, commissions, or bank loans to obtain their Know Your Customers (KYC) documents. These documents are then utilized without consent to create fake or shell firms, facilitating fraudulent ITC activities.

Key Cases Unearthed by DGGI:

1. Sirsa, Haryana Racket: The DGGI uncovered a well-organized racket operating from Sirsa, Haryana. Analysis revealed M/s. S.D. Traders, a newly registered firm in Delhi with NIL inward supplies but a significant number of E-way bills. Further investigation led to the identification of a premises in Sirsa, exposing a network of fake firms. The arrest of Mr. Manoj Kumar and the seizure of evidence suggested potential evasion of Rs. 1,100 crore.
2. Jaipur-based Beneficiary Firm: Cases were booked against a beneficiary firm in Jaipur availing ITC from fake firms in Sonipat, Haryana, and Delhi. Mr. Ashutosh Garg, proprietor of M/s. Shree Jee Spices, was found engaged in creating, operating, and selling fake firms. Searches revealed evidence of passing fake ITC amounting to Rs. 1,033 crore through 294 fake firms.
3. West Sagarpur, Delhi Scheme: Intelligence indicated the utilization of a specific IP address for filing GST returns of various fake firms in West Sagarpur, Delhi. This led to the involvement of Mr. Mukesh Kumar Jha, who admitted to creating and operating 122 fake firms. Masterminds, including Mr. Amit Kumar Jha, Mr. Roshan, and Mr. Vansh Chaudhary, were arrested for passing on fake ITC of Rs. 315 crore.
4. OPCs for ITC Fraud: A revelation surfaced about the formation or purchase of One Person Companies (OPCs) for ITC fraud, primarily dealing in the supply of services. Searches in Pitampura, Delhi, uncovered evidence of 190 fake firms, passing on ineligible ITC amounting to Rs. 393 crore. Mr. Rahul, instrumental in operating these firms, was arrested with multiple forged PAN and Aadhar cards.

Conclusion:

The DGGI’s relentless efforts in dismantling fake ITC syndicates and apprehending tax evaders demonstrate its resolve to uphold tax compliance and integrity. By leveraging advanced technological tools and conducting thorough investigations, the agency continues to safeguard the nation’s tax revenues and combat financial fraud.