Intro
Massive inter-state fraud network used shell firms and bogus invoices
CH NEWS
BENGALURU
Enforcement officers of the Southern Zone Commercial Tax Department have unearthed a massive ₹410 crore fraud involving fake tax receipts across multiple states, leading to the arrest of a key accused.
The accused, Tauqeer alias Mohammed (42), was apprehended and produced before the Special Economic Offences Court, which remanded him to 14-day judicial custody. Officials said he was part of a wider network operating across Karnataka, Andhra Pradesh and Tamil Nadu.
Investigations revealed that the group set up dozens of shell companies using forged documents and fake identities. These entities generated bogus tax invoices without any actual supply of goods, enabling fraudulent claims of input tax credit and causing significant losses to the government exchequer.
According to officials, the accused used fake rental and lease agreements to obtain business registrations. They allegedly created sole proprietorships and LLPs using stolen PAN and Aadhaar details, subsequently securing GST registrations based on fabricated credentials.
Once registered, the network generated invoices for materials such as cement, iron bars, zinc sheets and pipes. These invoices were circulated among multiple shell entities—categorised as service providers, intermediaries and end buyers—to create a layered trail of transactions.
Authorities found that several bank accounts were opened in the names of unsuspecting individuals to facilitate fund movement. The accused would rotate fake invoices across these accounts to claim illegitimate input tax credits, inflating transaction volumes without actual trade.
Officials said the fraud amount detected so far stands at ₹410 crore, including approximately ₹102.5 crore claimed through fake input tax credits. The network operated with precision, cancelling company registrations whenever authorities raised suspicion and restarting operations under new entities.
The racket not only defrauded the government but also misled contractors and traders who unknowingly became part of the fraudulent chain.
Further investigation is underway to identify other members of the network and trace financial links. Authorities indicated that more arrests are likely as they continue to unravel the full scale of the operation and recover diverted funds.
