CGST Delhi South Unearths ₹8 Crore ITC Fraud; Company Director Arrested
Officials found that the supplier entities involved were either suspended or had their registrations cancelled, indicating the absence of genuine business activity.
Data analytics-driven probe exposes fake input tax credit chain, triggering arrest in a growing crackdown on GST fraud.
New Delhi: The Central Goods and Services Tax Delhi South Commissionerate on Friday detected fraudulent availment and utilisation of input tax credit (ITC) exceeding ₹8 crore, leading to the arrest of a company director under provisions of the CGST Act, 2017.
The action follows an enforcement drive by the Anti-Evasion Branch, which used data analytics to identify suspicious transactions linked to ineligible ITC claims. Investigations revealed that the taxpayer had availed ITC without actual receipt of goods or services, in violation of Section 16 of the CGST Act.
Officials found that the supplier entities involved were either suspended or had their registrations cancelled, indicating the absence of genuine business activity. A backward supply chain analysis across multiple layers—L1, L2 and L3—confirmed that there were no underlying inward supplies, effectively breaking the credit chain and rendering the ITC inadmissible.
The probe further established that the company had passed on ineligible ITC to its buyers without actual supply, thereby extending the fraudulent credit chain.
The director’s statement was recorded under Section 70 of the CGST Act on April 16, during which he admitted to managing and controlling the company’s transactions. However, he failed to provide documentary evidence to support the legitimacy of the claims.
Based on the findings, authorities invoked provisions under Sections 132(1)(b) and 132(1)(c), read with Section 132(1)(i), categorising the offences as cognizable and non-bailable. The accused was arrested under Section 69(1) and subsequently produced before the Patiala House Court.
The court has remanded the director to judicial custody till April 30, 2026.
Officials said further investigation is underway to trace the full extent of the fraud and identify additional entities involved in the network.
