GST Officer and Lawyers Nabbed in Rs 718 Crore Scam with 500 Fake Firms

Introduction

In a stunning revelation, a complex GST fraud involving ₹54 crore has been uncovered by the Anti-Corruption Bureau (ACB) of the Delhi Government. The fraudulent scheme, masterminded by a rogue GST officer, a trio of lawyers, and other accomplices, manipulated the Goods and Services Tax (GST) system to claim undue refunds through fake companies and invoices.

The Scheme

The scandal, dubbed "The Special 7 and 500 Firms," involved the creation of 500 fictitious companies and bogus invoices amounting to ₹718 crore. These entities, which ostensibly engaged in the import/export of medical goods, were entirely fictitious and existed only on paper.

The Rogue Officer

Central to the fraud was Babita Sharma, a GST officer who orchestrated the scheme involving 96 fake firms. Between 2021 and 2022, Sharma approved over 400 refund claims worth ₹35.51 crore. Initially, refunds were minimal, but by the second year, the approvals surged. Alarmingly, these refunds were processed within three days of application, often without proper verification.

The Modus Operandi

The fraudulent operation involved generating fake invoices for ₹718 crore. Investigations revealed that refunds were issued without verifying the authenticity of invoices or Input Tax Credit (ITC). Additionally, 15 firms lacked mandatory Aadhaar verification and physical inspections. Following Sharma's transfer to Ward 22 in July 2021, 48 firms received ₹12.32 crore in refunds.

The Accomplices

The ACB’s probe identified three lawyers - Rajat, Mukesh, and Narendra Saini who managed 23 firms from a single email ID and mobile numbers. These firms, using five different PAN numbers, generated fake invoices worth ₹173 crore. Seven of these companies purportedly dealt in medical goods and reported ₹30 crore in business on paper. The refunds were funneled into various bank accounts owned by the lawyers and their families, with over 1,000 accounts linked to the fake firms and their associates.

Additional Involvement

The investigation also implicated Manoj Goyal, a fake firm owner, and two transporters, Surjeet Singh and Lalit Kumar. These individuals were found to have generated forged e-way bills and receipts to facilitate GST refunds, receiving compensation for providing fake documentation.

Conclusion

This massive fraud highlights significant vulnerabilities in the GST system and underscores the need for stricter checks and balances. The ACB’s ongoing investigation aims to bring all involved parties to justice and recover the swindled funds.