₹1,464 crore fake billing racket busted by Karnataka commercial tax department

Bengaluru: In a major crackdown on economic offences, the Enforcement Wing (South Zone) of the Karnataka Commercial Tax Department has unearthed a massive inter-state fake billing and GST fraud racket involving transactions worth ₹1,464 crore.

The racket, spread across Karnataka and Tamil Nadu, allegedly enabled the fraudulent availing and transfer of Input Tax Credit (ITC) amounting to nearly ₹355 crore without any actual movement of goods.

According to officials, the accused were involved in generating fake invoices related to construction materials such as cement, iron and steel. Investigations revealed that a well-organised cartel created a web of shell companies to circulate ITC, thereby causing huge losses to the exchequer.

No physical supply of goods took place, and the transactions existed only on paper. The department stated that the accused obtained multiple GST registrations using forged documents.

Fabricated rental agreements, fake tax-paid receipts, forged signatures of landlords and tenants, stamp papers sourced from online platforms, and bogus notary attestations were allegedly used to create a façade of legitimate business operations.

Once the ITC was passed on through these shell firms, the GST registrations were voluntarily cancelled to evade scrutiny. The fraud came to light through the department’s Non-Genuine Taxpayer (NGTP) module.

Using advanced GST analytics, backend data analysis and IP address tracking, investigators detected abnormal invoicing patterns and circular ITC movements. These red flags prompted coordinated search and seizure operations.

Simultaneous raids were conducted in Bengaluru, Chennai, Vellore and Pernambut. During the searches, officials seized 24 mobile phones, 51 SIM cards, rubber stamps of multiple firms and several bank statements linked to different entities. Four accused have been arrested in connection with the case.

The arrested individuals are alleged to be associated with fake firms such as Trian Traders, Wonder Traders and Royal Traders, along with shell entities including Power Steel and Cement and P.R. Construction. The accused have been identified as Eddal Pratap, Revathi, Irbaz Ahmed and Nafeez Ahmed.

The Economic Offences Special Court in Bengaluru has remanded all four accused to 14 days of judicial custody. Officials indicated that further arrests are likely as the investigation progresses, and more firms and beneficiaries of the fake ITC network may be identified.

Senior officers said the operation underscores the department’s intensified efforts to curb GST evasion and dismantle organised tax fraud networks. They reiterated that strict action will be taken against those misusing the GST system and warned traders against engaging in fake billing practices.

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