DGGI busts ₹593 crore fake invoice fraud; mastermind arrested in Bengaluru

In a significant crackdown, the DGGI has exposed a ₹593 crore GST fraud scheme orchestrated by Mohammad Saifullah in Bengaluru.

In a major crackdown on GST fraud, the Belagavi zonal unit of the Directorate General of GST Intelligence (DGGI) has unearthed a fake input tax credit racket worth approximately ₹593 crore, officials said.

Utilizing shell companies and false invoices, the operation exploited the tax system, leading to wrongful claims of input tax credits in Bengaluru.

The action followed an investigation into a suspicious GST registration, which led to multiple searches on premises linked to Star Tax Consultant in Bengaluru, the DGGI said in a statement.

"The searches exposed a well-organised network engaged in issuing fake invoices without any actual supply of goods or services, enabling wrongful availment and passing on of input tax credit (ITC) amounting to nearly ₹235 crore," the statement said.

Preliminary investigation revealed that numerous GST registrations were being operated by the accused solely for generating bogus invoices and e-way bills to facilitate fraudulent ITC claims by the ultimate beneficiaries.

The accused systematically used online accounting software to record and monitor transactions routed through several shell entities with no genuine business activity.

The statement said that Mohammad Saifullah, a registered GST practitioner identified as the mastermind of the operation, was found to be actively managing multiple non-existent and shell GSTINs and orchestrating the issuance of fake invoices and e-way bills in exchange for commission calculated as a percentage of invoice value.

"On being confronted with incriminating evidence, he admitted to his role in the fraudulent scheme. Saifullah was arrested on February 24 in Bengaluru under Section 69 of the CGST Act, 2017," the statement said.

Saifullah was produced before a special court for economic offences in Bengaluru, which granted transit remand for his transfer to Belagavi.

He was subsequently presented before the Judicial Magistrate First Class-4 court in Belagavi, which remanded him to judicial custody.

A probe is underway to identify the additional beneficiaries and quantify the full extent of the fraud, the DGGI said.