Karnataka busts massive interstate Rs 1,464 crore carousel fraud, arrests four in coordinated crackdown
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Bengaluru, Jan 5 : In a significant blow to tax evasion networks plaguing India's Goods and Services Tax (GST) system, the Enforcement Wing (South Zone) of Karnataka's Commercial Taxes Department has exposed and dismantled a sprawling interstate fake invoicing cartel.
Operating across Karnataka and Tamil Nadu, the syndicate orchestrated fraudulent transactions totalling a staggering Rs 1,464 crore in building materials like cement, iron, and steel, leading to the wrongful claiming and passing of Input Tax Credit (ITC) worth approximately Rs 355 crore—all without any actual movement of goods.
The breakthrough came through cutting-edge analytics within the GST framework, a statement said on Sunday.
Leveraging their in-house Non-Genuine Taxpayer (NGTP) module and tracing IP address trails from the GST back office, investigators pinpointed suspicious invoicing patterns and circular ITC flows among interconnected entities. This data-driven approach triggered a meticulously planned enforcement operation, highlighting how technology is revolutionising the fight against fiscal fraud, the statement said.
Delving deeper, probes uncovered a sophisticated web of deceit; fraudsters secured multiple GST registrations using forged documents, including stamp papers bought online, phony rental agreements, falsified signatures, bogus tax receipts, and counterfeit notarial stamps. These sham registrations birthed layers of shell companies that issued fake invoices, simulating legitimate business while funnelling illicit credits.
Once substantial ITC was siphoned, the entities conveniently cancelled their registrations voluntarily, a tactic investigators describe as a novel ploy to dodge audits and erase trails. This emerging trend has prompted the Enforcement Wing to explore new safeguards to plug such loopholes in the system.
The operation culminated in synchronised search and seizure raids across Bengaluru, Chennai, Vellore, and Pernampattu, yielding a trove of evidence; 24 mobile phones, 51 SIM cards, two pen drives, bank statements, and rubber stamps from various firms. These items promise to unravel more about the cartel's operations, finances, and cross-border tentacles, the statement further said.
Marking a milestone in interstate collaboration, four masterminds were arrested with Tamil Nadu's Commercial Tax authorities playing a pivotal role. Brothers Irbaz Ahmed and Nafiz Ahmed from Tamil Nadu, behind bogus outfits like Trion Traders, Wonder Traders, Royal Traders, and Galaxy Enterprises, were nabbed in Pernampattu.
In Bengaluru, Eddala Pratap and his associate Revati, who ran shells such as Power Steel and Cement, P.R. Construction, S.V. Traders, and S.R.S. Cement Steel Traders, were also detained, said the statement. All four appeared before Bengaluru's Special Court for Economic Offences, which remanded them to 14 days of judicial custody.
Operating across Karnataka and Tamil Nadu, the syndicate orchestrated fraudulent transactions totalling a staggering Rs 1,464 crore in building materials like cement, iron, and steel, leading to the wrongful claiming and passing of Input Tax Credit (ITC) worth approximately Rs 355 crore—all without any actual movement of goods.
The breakthrough came through cutting-edge analytics within the GST framework, a statement said on Sunday.
Leveraging their in-house Non-Genuine Taxpayer (NGTP) module and tracing IP address trails from the GST back office, investigators pinpointed suspicious invoicing patterns and circular ITC flows among interconnected entities. This data-driven approach triggered a meticulously planned enforcement operation, highlighting how technology is revolutionising the fight against fiscal fraud, the statement said.
Delving deeper, probes uncovered a sophisticated web of deceit; fraudsters secured multiple GST registrations using forged documents, including stamp papers bought online, phony rental agreements, falsified signatures, bogus tax receipts, and counterfeit notarial stamps. These sham registrations birthed layers of shell companies that issued fake invoices, simulating legitimate business while funnelling illicit credits.
Once substantial ITC was siphoned, the entities conveniently cancelled their registrations voluntarily, a tactic investigators describe as a novel ploy to dodge audits and erase trails. This emerging trend has prompted the Enforcement Wing to explore new safeguards to plug such loopholes in the system.
The operation culminated in synchronised search and seizure raids across Bengaluru, Chennai, Vellore, and Pernampattu, yielding a trove of evidence; 24 mobile phones, 51 SIM cards, two pen drives, bank statements, and rubber stamps from various firms. These items promise to unravel more about the cartel's operations, finances, and cross-border tentacles, the statement further said.
Marking a milestone in interstate collaboration, four masterminds were arrested with Tamil Nadu's Commercial Tax authorities playing a pivotal role. Brothers Irbaz Ahmed and Nafiz Ahmed from Tamil Nadu, behind bogus outfits like Trion Traders, Wonder Traders, Royal Traders, and Galaxy Enterprises, were nabbed in Pernampattu.
In Bengaluru, Eddala Pratap and his associate Revati, who ran shells such as Power Steel and Cement, P.R. Construction, S.V. Traders, and S.R.S. Cement Steel Traders, were also detained, said the statement. All four appeared before Bengaluru's Special Court for Economic Offences, which remanded them to 14 days of judicial custody.
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