ED's money laundering probe exposes massive GST fraud network worth ₹1,102 crore

The Directorate of Enforcement (ED) launched a money laundering investigation and conducted extensive searches across 25 cities across the country including Ahmedabad, Gandhinagar, Bhavnagar, Botad, Gandhidham, Mumbai, and Bengaluru in connection with a massive GST Input Tax Credits (ITC) fraud case.

During the weekend operation, ED carried out searches at 25 locations and confiscated crucial evidence such as forms for changing mobile numbers linked to Aadhaar cards, counterfeit bills issued by fictitious entities, and digital records.

ED exposes GST evasion of ₹122 crore

The premier financial crime investigation agency uncovered a staggering sum of over Rs 1,102 crore in fake invoices, exposing an evasion of GST worth Rs 122 crore. The fraudulent activities involved individuals, including Mohammad Ejaj Bomar, connected to 461 sham firms who illegitimately claimed bogus Input Tax Credits.

Earlier, the Bhavnagar Police had booked Mohammed Ejaj Bomar and his associates for orchestrating a scam where unsuspecting individuals, including workers, rickshaw pullers, and hawkers, were exploited. These individuals were paid small sums of money in exchange for obtaining Aadhaar and PAN cards. The chargesheet filed by the police stated that "bogus companies were then established using these documents, and false bills were generated to evade taxes. The racketeers established numerous bogus firms and shell companies, using fabricated documents to falsely claim input tax credit."

Fake Invoices and Bogus Entities

The fraudulent scheme involved the creation of counterfeit documents, which were used to register fake GST firms. These entities were used to facilitate the provision of fictitious Input Tax Credit (ITC).

An ED official explained that "fake entities were passed on input tax credit by generating fake invoices on a commission basis. Payment for these bogus invoices, made through banking channels, was settled in cash between the operator of the fake entity and the beneficiary."

ED seizes crucial evidence

The criminal network targeted individuals in need of financial assistance, luring them with promises of monthly returns of Rs 10,000 in exchange for providing their identity documents.

The accused masterminds manipulated the mobile numbers linked to Aadhaar cards of several individuals, enticing them with false promises of financial aid under government schemes. These manipulated cards were later used to obtain PAN and GST registrations.

The fabricated documents were used to establish dummy bank accounts and fraudulent companies with valid GST registration numbers. Multiple fictitious firms were set up, and counterfeit purchase and sales bills were generated to fraudulently obtain input tax credit.