Daijiworld Media Network - New Delhi
Ahmedabad/New Delhi, Apr 20: A key accused in a massive Goods and Services Tax (GST) refund fraud estimated at around Rs 1,825 crore has been arrested at Delhi’s international airport after returning from Dubai, officials confirmed on Monday.
Kapil Chugh was apprehended on Sunday by the Directorate General of GST Intelligence (DGGI), Ahmedabad Zonal Unit, at Indira Gandhi International Airport. Authorities said he had evaded investigation for months, ignored at least 22 summonses, and fled the country after allegedly orchestrating the scam across multiple regions.
Investigators allege that Chugh, along with associate Vipin Sharma, set up a complex network to fraudulently claim input tax credit (ITC) and convert it into cash through bogus refund claims tied to zero-rated exports.
According to officials, the operation was run through a web of shell companies created using borrowed KYC documents. These firms had no real business activity, infrastructure, or workforce. Individuals listed as proprietors or directors were reportedly paid fixed cash amounts to act as name lenders, while all operations—including GST registrations, invoicing, banking transactions, and return filings—were centrally controlled.
The probe revealed that fake purchase invoices were used to generate fraudulent ITC without any actual movement of goods. High-value tobacco products were shown on paper to inflate credit, which was then routed through multiple intermediary firms to create layered transactions. This enabled accumulation of ineligible ITC in select entities projected as exporters, particularly linked to the Kandla Special Economic Zone.
Parallel investigations found that low-value or unbranded tobacco products were procured locally—often without invoices—and falsely declared as premium goods such as kimam and jarda for export at highly inflated values. Authorities noted the absence of any manufacturing facilities to justify such conversions.
Officials said the inflated turnover reported in GST filings was largely driven by fake billing, enabling fraudulent refund claims without actual tax payments. Many of the claimed exports were either fictitious or grossly exaggerated, supported by fabricated transport documents and suspicious e-way bills using repeated or questionable vehicle numbers.
Financial trail analysis indicated circular or negligible fund flows despite large transaction values. Payments were often routed through related entities or withdrawn in cash soon after, with no evidence of genuine supplier payments or logistics expenses. Several firms involved shared common contact details, IP addresses, and accounting staff, pointing to centralized control.
Authorities further alleged that Chugh also siphoned off around Rs 11 crore from Yes Bank by misrepresenting and inflating the turnover of his export business. He has also been charge-sheeted by the Central Bureau of Investigation in a separate case involving fraudulent credit facilities obtained through forged documents.
In a related development, the Securities and Exchange Board of India (SEBI) had issued an order against Vipin Sharma, Managing Director of Elitecon, for allegedly inflating company valuation through fake turnover linked to the GST fraud.
Officials said the investigation is ongoing, with further arrests and financial tracing likely as authorities continue to unravel the full extent of the scam.