DGGI raids and seized Rs 48 crore worth of fake ITC claims from six shell companies

GST intelligence branch DGGI raided at least six premises in the capital Delhi. Fake bills worth Rs 266 crore and Rs 48 crore input tax credit (ITC) fraud were unearthed in this search operation. The Finance Ministry released this information on Friday. ITC is a major component of GST, based on which businessmen can set off the GST paid on goods or services procured for their business requirements against their tax liability. That is, if a businessman has paid GST on buying raw material, then he can avail the same tax concession on selling the finished products.

This step has been taken by the Bengaluru Zonal Unit of DGGI. During the probe, it came to fore that four companies have reported receipt of goods and services of hundreds of crores of rupees without any business operation.

The investigation revealed that a chartered accountant/statutory auditor was the mastermind behind this entire fraud. He himself had also been a director in some shell companies. He used to manage the transactions of these companies. His involvement has become clear from the documents and shareholding pattern. During the search, original documents, such as invoices and seals, were recovered from the mastermind's hideouts. He has been arrested.

The DGGI Bengaluru Zonal Unit has started a comprehensive investigation into this fraud. It may have an impact on innocent investors in listed companies. The statement said that DGGI has exposed the pattern of GST fraud being committed by listed companies through circular trading and fake ITC. The Directorate General has recently shared specific information with SEBI to initiate action under the SEBI Act.