Delhi ACB Busts Massive Fake Firms GST Refund Scam; Nine Arrested

The Anti-Corruption Branch (ACB) of Delhi has unearthed a colossal scam involving around 500 nonexistent firms falsely claiming GST refunds amounting to Rs 54 crore. The investigation has led to the arrest of nine individuals, including GST officers, accountants, and proprietors of fake firms.

The Anti-Corruption Branch (ACB) of Delhi has uncovered a massive scam involving approximately 500 non-existent firms that were conducting business activities on paper to falsely claim GST refunds. These fake firms fraudulently obtained GST refunds worth around Rs 54 crore. Additionally, forged invoices amounting to approximately Rs 718 crore have also been discovered.

The scam has exposed glaring procedural lapses and malpractices by GST officers, resulting in a significant loss to the government exchequer. The ACB, as part of its ongoing investigation, has arrested two employees of the primary accused—a chartered accountant and an accountant. They are accused of being major recipients of the fake GST refunds and facilitating the fraudulent claims.

In an earlier phase of arrests on August 12, 2024, the ACB had apprehended a GST officer, three advocates, two transporters, and a proprietor of fake firms. The GST officer is accused of sanctioning Rs 35.51 crore in refunds for 96 bogus firms during the financial year 2021-22, despite only Rs 7 lakh being refunded the previous year. The refunds were approved within 2-3 days, indicating clear misuse of authority.

Sensing foul play, the Vigilance/GST Department conducted physical verifications, discovering all these firms to be non-existent. A subsequent inquiry prompted the matter being referred to the ACB for a detailed investigation. It was revealed that the fraudulent GST refunds were approved without verifying Input Tax Credit, crucial for identifying bogus refunds. Fake invoices amounting to around Rs 718 crore were used in these transactions.

Investigations showed that the GST refund amounts were funneled through various bank accounts, ultimately reaching the accused advocates and their families. The ACB has arrested nine individuals so far and continues to investigate other GST officials' roles and culpabilities.

(With inputs from agencies.)