Rs 14 crore tax fraud busted in Delhi, Rs 1.1 crore recovered, 1 arrested

The Delhi State Goods and Services Tax (GST) Department has busted a Rs 14 crore GST refund fraud involving four fictitious firms created solely to claim illegitimate tax refunds. According to a press release issued on June 15 by the Department of Trade and Taxes, the Government of NCT of Delhi, Rs 1.16 crore has already been recovered, and one person has been arrested so far in connection with the case.

The investigation uncovered a network of individuals who operated bogus entities under the pretence of conducting genuine business activities. The operation marks a first-of-its-kind for the Department, which relied on advanced big data analytics and detailed chain analysis, including the examination of banking transactions.

The trail of illicit funds led to multiple locations across Delhi, other Indian states, and foreign jurisdictions such as Hong Kong and Singapore.

The Department's data-led probe found that several entities used identical PAN numbers, mobile numbers, and email addresses - indicating coordinated fraud. The registration of the implicated Delhi-based firms has been suspended. Authorities in other states have also been informed about further action against entities within their jurisdictions.

Working in coordination with the Income Tax Department, the Delhi GST Department has flagged and recommended the blocking of PANs tied to fraudulent operations. With financial trails leading to entities outside India, a detailed report has been submitted to the Department of Revenue, Government of India, for necessary action.

Efforts to recover the remaining amount are ongoing. So far, 45 bank accounts linked to 27 entities have been frozen to prevent any diversion of funds. An FIR has also been filed with the Economic Offences Wing of the Delhi Police.

In a key development, Bunty, son of Harish Chander and the proprietor of one of the beneficiary firms, has been arrested. He was produced before a Metropolitan Magistrate's Court and remanded to police custody.

A senior official from the Delhi GST Department stated that the case reflects the Department’s zero-tolerance approach to tax fraud, reaffirming its commitment to protecting the integrity of the GST system. The official warned that all forms of tax evasion would be pursued with full legal force.

This case also showcases the Department's growing capacity to deploy inter-agency coordination and cutting-edge technology in tackling complex financial fraud. The Department reiterated that any attempt to defraud the system would be met with strict legal consequences.