**Summary:**
The Directorate General of GST Intelligence (DGGI), Bengaluru Zonal Unit, has uncovered a network of six shell companies involved in fraudulent invoicing totaling Rs. 266 crore, leading to the fraudulent claim of Rs. 48 crore in Input Tax Credit (ITC). Investigations revealed that the shell companies, lacking genuine business operations, engaged in circular trading to artificially inflate turnover, and one was listed on the stock exchange. A key mastermind, initially identified as a Chartered Accountant (CA) and statutory auditor who managed transactions and served as a Director in some of the shell companies, has been arrested. Searches of multiple premises in Delhi yielded original documents, including invoices and seals, at the mastermind's location. The DGGI Bengaluru Zonal Unit is conducting a comprehensive investigation into the fraud, which has potential implications for investors in the listed company. Information regarding the GST fraud pattern involving circular trading and fake ITC by listed companies has been shared with the Securities and Exchange Board of India (SEBI) for potential action under the SEBI Act. This information was released by PIB Delhi on July 11, 2025, at 4:58 PM (Release ID: 2144036).
Key Entities Referenced
Ministry of Finance: Government ministry responsible for financial matters.
DGGI Bengaluru Unit: Directorate General of GST Intelligence, Bengaluru Zonal Unit, an investigative arm.
Bengaluru, Karnataka: City in Karnataka where the initial investigation was initiated.
Delhi: City where searches were conducted.
Input Tax Credit: A mechanism to avoid double taxation.
SEBI Act: The act under which SEBI can initiate action.
SEBI: Securities and Exchange Board of India
GST: Goods and Services Tax
Ministry of Finance
DGGI Bengaluru Unit uncovers six shell companies
with fraudulent invoices worth Rs. 266 crore involving
Rs. 48 crore fraudulently claimed Input Tax Credit;
mastermind arrested
Posted On: 11 JUL 2025 4:58PM by PIB Delhi
In a follow up operation connected with investigation of a case initiated in Bengaluru, the officers of
Directorate General of GST Intelligence, Bengaluru Zonal Unit, carried out searches in over six premises in
Delhi, and uncovered fraudulent invoices worth over Rs 266 crore, involving availment and passing on of
fraudulent Input Tax Credit (ITC) of Rs 48 crore from the shell companies.
The masterminds floated shell companies with no actual business activity, carried circular trading to inflate
turnover, listed one of the companies in stock exchange and indulged in ITC fraud.
Investigation revealed that four companies, with no business activity, have shown receipt of hundreds of
crores worth of goods and services. The investigation indicated that initially, the key mastermind was one of
the CA/statutory auditor, who managed the transactions of these companies. Further investigation revealed
that the structure of entities and shareholding pattern, along with changes in the same, the CA/statutory
auditor was acting as Director in a few of these shell companies at some point of time – clearly establishing
the links behind the origin of the six shell companies. During searches at the premises of these companies,
original documents, such as invoices and seals, were found in the premises of the mastermind. The key
mastermind of the case has been arrested.
DGGI Bengaluru Zonal Unit has initiated a comprehensive investigation into this fraud, which has
implications for innocent investors in listed companies.
Having found such pattern of GST frauds by use of circular trading and fake ITC by listed companies, DGGI
has shared specific inputs with SEBI in the recent past for initiating action under the SEBI Act.
****
NB/KMN
(Release ID: 2144036)