Daijiworld Media Network - New Delhi
New Delhi/Itanagar, Jan 22: The Enforcement Directorate (ED) has conducted extensive search operations across West Bengal, Manipur, and Jharkhand in connection with a large-scale fake Input Tax Credit (ITC) scam estimated at around Rs 100 crore, officials from the central agency said.
The searches were carried out on January 20 by the ED’s Itanagar unit under the Prevention of Money Laundering Act (PMLA), 2002, covering 10 premises linked to entities suspected of orchestrating the fraud. The investigation stems from an FIR registered under the Indian Penal Code following a complaint filed on October 3, 2024, by the CGST and Central Excise, Itanagar Commissionerate.
The complaint named M/s Sidhi Vinayak Trade Merchant, Arunachal Pradesh, which was found to be non-existent at its registered address. ED investigations revealed that the firm had issued as many as 15,258 fake invoices within just six months, between October 2023 and March 2024. These invoices carried a taxable value of approximately Rs 658.55 crore and were routed to 58 recipient entities registered across 11 states.
Through this network of bogus billing, the recipient entities allegedly availed fraudulent ITC worth about Rs 99.31 crore during the 2023–24 financial year. The ED said the scheme caused significant revenue loss to the government while generating proceeds of crime for those involved.
During the searches, investigators found that several Kolkata-based entities—including Dayal Commercial, Apee Enterprises, Phoenix Hydraulics, Ram Awatar Bansal & Co., and Bhima Shankar Industries—were operating solely to generate fake invoices and pass on ITC. These firms allegedly issued bogus bills worth nearly Rs 450 crore, supported by fabricated records of vehicle manufacturing and sales. Fake GST refunds were claimed and siphoned off, with the proceeds shared among promoters, suppliers, and professional intermediaries. Investigators also detected the use of fake e-way bills and suspected kickbacks to officials.
In Manipur, ED officials found that M/s FEMA Marketing’s declared place of business was still under construction and had no actual commercial activity. Despite this, the entity had shown the premises as operational on the GST portal for the past three years and reported a fictitious turnover of Rs 6.05 crore, passing on fraudulent ITC to major companies.
In Jharkhand, the proprietor of M/s Mahesh Prasad Gupta reportedly admitted to availing fake ITC and failed to produce supporting invoices, e-way bills, or transport documents during questioning.
Officials said most of the entities involved were operational for only six to eight months before their GST registrations were cancelled by tax authorities. However, during this short period, they generated and circulated large volumes of fake ITC, some of which was eventually utilised by otherwise genuine businesses.
Search operations led to the freezing of multiple bank accounts, including Rs 21 lakh belonging to M/s S.K Construction, seizure of documents related to immovable properties, and recovery of incriminating records that revealed a well-organised misuse of the GST system through bogus invoicing, fake logistics documentation, and layered fund transfers.
The ED noted that while the case initially pointed to fake ITC claims of around Rs 99 crore, evidence gathered during the searches indicates that the actual scale of the fraud could be substantially higher, involving entities spread across several states. Further investigation is ongoing.