In a major crackdown on GST fraud, the Enforcement Wing (South Zone) of the Commercial Taxes Department has unearthed an inter-State fake invoice racket involving fraudulent transactions worth Rs 1,464 crore. The operation has led to the arrest of four individuals allegedly involved in generating bogus invoices and illegally availing Input Tax Credit (ITC) without the actual movement of goods.
Well-Organised Cartel Spanning Two States
According to officials, the bust followed specific intelligence inputs and sustained surveillance of suspicious GST activities. Investigations revealed a well-organised cartel operating across Karnataka and Tamil Nadu, primarily dealing in commodities such as cement, iron and steel, and other construction materials.
The accused allegedly created forged inward and outward supply invoices, showing large-scale transactions on paper while no physical movement of goods took place. These fake transactions were used to fraudulently avail and pass on ITC, resulting in substantial revenue loss to the exchequer.
Simultaneous Searches in Multiple Cities
The department conducted coordinated search and seizure operations at multiple locations, including Bengaluru, Chennai, Vellore, and Pernampattu. During the raids, officials seized:
- 24 mobile phones
- 51 SIM cards
- Two pen drives
- Bank statements
- Multiple rubber stamps linked to different business entities
These materials are believed to have been used to create and operate shell firms involved in issuing bogus GST invoices.
Fake Firms Used to Generate Bogus Invoices
Two brothers from Tamil Nadu - Irbaz Ahmed and Nafiz Ahmed - were arrested from Pernampattu. Investigators alleged that they floated several fake firms, including Trion Traders, Wonder Traders, Royal Traders, and Galaxy Enterprises, to generate fraudulent invoices.
In Bengaluru, Eddala Pratap and Revati were arrested for allegedly creating multiple shell entities such as Power Steel and Cement, P.R. Construction, S.V. Traders, and S.R.S. Cement Steel Traders to facilitate the fake transactions and circulate ITC.
Accused Remanded to Judicial Custody
All four accused were produced before the Special Court for Economic Offences in Bengaluru, which remanded them to judicial custody for 14 days. Further investigations are underway to identify additional beneficiaries, trace money trails, and assess the full extent of the tax evasion.
Strong Message Against GST Evasion
Officials said the action underscores the department's zero-tolerance approach towards GST fraud, particularly cases involving fake invoicing and ITC misuse. The Enforcement Wing has reiterated that advanced data analytics, intelligence sharing, and inter-State coordination will continue to be used to curb tax evasion networks.
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