In a significant breakthrough, the Department of Trade and Taxes, Government of NCT of Delhi, on Sunday uncovered a major case of Goods and Services Tax (GST) refund fraud amounting to approximately ₹14 crore.
The investigation revealed a network of individuals who had created and operated four fictitious firms solely to illegitimately claim GST refunds under the guise of genuine business activities.
This case marks a first-of-its-kind operation by the Department, where data analytics and detailed chain analysis including scrutiny of banking transactions were employed to trace the flow of funds across multiple entities located in Delhi, other Indian states, and even international jurisdictions such as Hong Kong and Singapore.
The Department’s data-driven investigation identified multiple entities using the same PAN, mobile numbers, and email addresses as those associated with the fraudulent firms.
As an immediate enforcement measure, the registrations of the Delhi-based entities have been suspended.
Additionally, information has been shared with jurisdictional authorities in other states for further action against the entities operating in their areas.
In coordination with the Income Tax Department, the Delhi GST Department has also flagged and recommended the blocking of PANs linked to the fraudulent activities, thereby restricting further misuse.
As funds have been traced to entities located outside India, a detailed report is being submitted to the Department of Revenue, Government of India, for necessary action.
So far, ₹1.16 crore has been successfully recovered, and proceedings are underway to retrieve the remaining amount.
The Department has also frozen 45 bank accounts linked to 27 implicated entities, effectively preventing further movement or diversion of illicit funds.
In view of the serious nature of the offence, an FIR has been lodged with the Economic Offences Wing (EOW) of the Delhi Police.
One of the key accused, identified as Bunty, proprietor of one of the fraudulent firms, has been arrested from Delhi. He was produced before the Metropolitan Magistrate’s Court, where police custody was granted. Further arrests are anticipated as the investigation progresses.
A senior official from the Delhi GST Department stated, “This decisive action reaffirms our zero-tolerance approach to GST fraud. Such offences not only drain public resources but also place an unfair burden on honest taxpayers. The Department remains resolutely committed to protecting the integrity of the GST system and will continue to pursue all forms of tax evasion with full legal force.”