UP Police Bust Inter-State GST Fraud Network; 1,200 Bogus Firms Floated Across 20 States, 4 Arrested

In a major crackdown on tax evasion, the Uttar Pradesh Police have uncovered an extensive inter-state racket that allegedly created nearly 1,200 shell companies across 20 states to facilitate fraudulent claims of Goods and Services Tax (GST) input tax credit (ITC). Four accused, including the alleged mastermind, have been arrested in connection with the case.

The arrests were made in Sitapur district. The prime accused has been identified as Ashish alias Sona, a resident of Agra. The other three arrested individuals are Kuldeep Singh and Vivek Kumar, also from Agra, and Suraj Rawat from Uttarakhand’s Almora district.

Cash, Documents and Digital Devices Seized

According to police, Rs 2.30 lakh in cash, multiple mobile phones, 70 GST registration certificates, Aadhaar cards, electricity bill copies, laptops, diary records and property-related documents were recovered during the operation. Investigators believe these materials were used to create and operate fake business entities across several states.

Kiran S, Inspector General (IG) of Lucknow Range, said the racket came to light after an intensive probe carried out jointly by multiple police stations along with surveillance and SWAT teams of Sitapur district police. He noted that the fraud had allegedly caused losses worth several crores to the government exchequer over the past 15 years.

Scam Detected After Bogus Firm Registered in Woman’s Name

The investigation began when Sitapur police registered a case after discovering that a fake firm had been created in the name of a local woman without her knowledge. Preliminary findings suggested that the entity was used to fraudulently avail GST benefits.

Circle Officer (Sitapur City) Vinayak Bhosale, who led the probe, stated that Ashish and his girlfriend — who is currently absconding — became involved in GST-related fraud between 2020 and 2021 while working at a private company in Noida. They were reportedly introduced to the racket by an acquaintance named Mani.

After returning to Agra, the duo allegedly established their own network and began expanding operations independently.

Fake Job Portal Used to Collect Personal Documents

Investigators revealed that the accused created a website named ‘workingindia.com’ to lure job seekers. Applicants were asked to submit personal documents such as Aadhaar cards, PAN cards, address proofs and educational certificates under the pretext of employment opportunities. Interviews were conducted online to make the scheme appear legitimate.

Using the collected documents, the accused allegedly registered fake firms under unsuspecting individuals’ names with GST authorities.

Sale of Shell Firms to Traders

Police said the accused would then approach traders and businessmen via social media platforms and online business networks, offering them ready-made firms for the purpose of evading GST. Each shell company was reportedly sold for approximately Rs 30,000 or more.

Traders allegedly used these entities to generate fictitious sales and purchase transactions, thereby fraudulently claiming input tax credit in multiple states including Tamil Nadu, Karnataka, Punjab, Haryana, Delhi and Uttar Pradesh.

Authorities also found that the accused opened bank accounts using forged identity documents to receive payments from buyers of the shell companies. Multiple laptops, SIM cards and mobile phones were used to manage registrations and financial transactions, while the accused frequently travelled across districts to widen their network.

Rs 5.88 Crore Fraud Through Single Bogus Firm

Police claimed that the firm registered in the name of the Sitapur woman alone was used to siphon off approximately Rs 5.88 crore through fraudulent GST filings.

The GST department has been informed about the developments, and further financial scrutiny is expected to follow.

SIT Formed to Probe GST Evasion Cases

In light of rising GST fraud cases, Uttar Pradesh Director General of Police (DGP) Rajeev Krishna had recently constituted a Special Investigation Team (SIT) under the leadership of the Inspector General of the Economic Offences Wing (EOW) to investigate cases involving GST fraud and tax evasion.

Officials indicated that further arrests and additional recoveries are likely as the investigation continues, particularly to trace the absconding accused and identify traders who benefited from the alleged scam.