CGST Delhi South busts ₹25.22 crore fake ITC case; firm proprietor arrested

NEW DELHI: Officers of the Anti-Evasion Branch of the Central Goods and Services Tax (CGST), Delhi South Commissionerate, have arrested the proprietor of an iron and steel trading firm in a case involving alleged fraudulent availment, utilisation and passing on of inadmissible Input Tax Credit (ITC) exceeding ₹25.22 crore.

According to the CGST investigation, the firm allegedly availed ITC on the basis of invoices issued by multiple suppliers, several of which were found to be non-existent, non-functional, suspended or cancelled.

The total value of the allegedly bogus invoices involved in the case is approximately ₹140.14 crore.

ITC claimed without receipt of goods

The investigation found that some of the suppliers did not have genuine business activity at their declared places of business. Field verification by CGST officers established discrepancies in the existence and functioning of several entities from which the invoices had been issued.

Further inquiry allegedly established that the firm claimed ITC without actually receiving the corresponding goods.

The investigation also found that the inadmissible ITC was allegedly passed on to other recipients through invoices issued without corresponding supply of goods.

The alleged transactions involved the fraudulent use of the GST input tax credit mechanism, which allows eligible businesses to set off tax paid on inputs against their tax liability, subject to prescribed conditions.

Proprietor arrested

Based on the evidence gathered during the investigation and statements recorded under Section 70 of the CGST Act, 2017, the proprietor was arrested on September 17, 2026, under Section 69 of the Act.

He was subsequently produced before the Patiala House Court in New Delhi.

The court remanded him to judicial custody for 14 days.

The CGST authorities said the investigation is continuing, indicating that further examination of the transactions and entities involved is underway.