The Directorate General of GST Intelligence (DGGI), Ahmedabad Zonal Unit, has unearthed a large-scale Goods and Services Tax (GST) evasion racket involving fraudulent input tax credit (ITC) claims amounting to approximately Rs. 78 crore, officials said on Tuesday. One individual has been arrested in connection with the case, which revolves around the creation and operation of multiple fictitious business entities.
Fake Firms Used to Generate Bogus Invoices
According to officials familiar with the investigation, the fraud was carried out through a network of eight GST-registered firms that existed largely on paper. These entities allegedly issued and received invoices without any actual movement or supply of goods or services, enabling the wrongful availing and passing on of ineligible ITC.
The cumulative taxable turnover of the bogus transactions is estimated at nearly ₹1,300 crore, causing substantial revenue loss to the government exchequer.
Intelligence-Led Searches and Seizures
Acting on specific intelligence inputs, DGGI officers conducted simultaneous searches at multiple locations in Ahmedabad. During the operations, officials seized incriminating documents, digital storage devices, and financial records, which reportedly revealed a well-coordinated web of fake invoicing activities.
Preliminary analysis of the seized material indicates that the firms were deliberately created to generate fraudulent invoices solely for the purpose of claiming ITC, rather than conducting any genuine business.
Mastermind Allegedly Operated Through Dummy Directors
Investigators allege that the entire network was controlled by Prabhat Somani, a resident of Ahmedabad, who is believed to be the key orchestrator behind the scheme. Officials claim Somani floated the entities by appointing dummy directors, managed GST registrations and return filings, and oversaw banking operations linked to the movement of illicit funds.
Evidence gathered so far reportedly points to his direct involvement in coordinating invoice generation, routing of funds, and compliance manipulation.
Arrest Under Non-Bailable GST Offences
Given the gravity of the offences, which are cognisable and non-bailable under the GST law, Somani was arrested following the investigation. Authorities have stated that further inquiry is ongoing to identify additional beneficiaries, trace fund flows, and assess the full extent of the fraud.
Wider Crackdown on Fake ITC Practices
The case forms part of a broader nationwide drive by GST intelligence authorities to dismantle fake ITC rackets that undermine tax compliance and distort market competition. Officials reiterated that stringent action would continue against individuals and entities found misusing the GST framework.
