In a major crackdown on GST-related tax evasion, the Enforcement Wing (South Zone) of Karnataka’s Commercial Taxes Department has dismantled a large interstate fake invoicing cartel, involving fraudulent transactions worth Rs 1,464 crore. Four key suspects have been arrested in a coordinated operation across Karnataka and Tamil Nadu.
The syndicate orchestrated bogus transactions in building materials, including cement, iron, and steel, fraudulently claiming and passing on Input Tax Credit (ITC) of approximately Rs 355 crore without actual movement of goods. The scam relied on circular trading and fake invoicing, exploiting loopholes in the GST system and causing significant revenue losses.
Investigators used advanced data analytics within the GST framework, including the Non-Genuine Taxpayer (NGTP) module, to trace suspicious invoicing patterns and circular ITC flows among interconnected entities. IP address tracking from the GST back office helped identify the fraudulent network.
Further investigation revealed a network of shell companies created using forged documents, fake stamp papers, fraudulent rental agreements, forged signatures, bogus tax receipts, and counterfeit notarial stamps. These firms existed primarily on paper, issuing fake invoices to generate illegal ITC. Once ITC amounts were siphoned off, the entities would voluntarily cancel their GST registrations to evade audits and erase digital trails.
The operation included coordinated raids in Bengaluru, Chennai, Vellore, and Pernampattu. Police seized 24 mobile phones, 51 SIM cards, two pen drives, bank statements, and rubber stamps, expected to provide further leads on the cartel’s financial dealings and interstate links.
Arrests:
Irbaz Ahmed & Nafiz Ahmed (Tamil Nadu): Allegedly ran bogus firms including Trion Traders, Wonder Traders, Royal Traders, and Galaxy Enterprises; arrested in Pernampattu.
Eddala Pratap & Revati (Karnataka): Allegedly operated shell entities such as Power Steel and Cement, P.R. Construction, S.V. Traders, and S.R.S. Cement Steel Traders; arrested in Bengaluru.
All four were produced before the Special Court for Economic Offences in Bengaluru and remanded to 14 days of judicial custody.
Authorities stated that investigations are ongoing, with more arrests expected as they trace the money trail and identify other beneficiaries involved in this large-scale GST fraud.
