A massive GST fraud, allegedly originating from Chittoor district in Andhra Pradesh, has come under intense scrutiny after preliminary investigations revealed the systematic misuse of identity documents belonging to petty shoppers and daily-wage earners to generate fake ITC claims exceeding Rs 100 crore.
Officials investigating the case believe that the actual value of inter-State transactions linked to the racket could be nearly ten times higher, pointing to one of the largest organised GST fraud networks uncovered in the region in recent years.
Scam Comes to Light After Victim Approaches Police
The fraud surfaced when G. Vijaya Chakravarthi, a former wine shop worker from Amman Koil Street, Chittoor, approached Superintendent of Police Tushar Dudi on December 29, 2025, alleging misuse of his Aadhaar, PAN and other personal documents.
In his complaint, Mr. Chakravarthi accused his former employer, Shaik Rizwan, a scrap merchant based in Chittoor, of forging his credentials to register shell companies in his name. He stated that he received two GST demand notices amounting to Rs 92,082 and Rs 41.8 lakh in August, despite earning only a few hundred rupees a day and having no knowledge of running any business.
"I was in a dilemma for nearly three months. I realised I was a victim only after finding my former employer's mobile numbers mentioned in GST records, though the company was registered in my name," he told officials.
Shell Companies Found in Names of Economically Vulnerable Individuals
Following the complaint, GST authorities detected multiple shell companies registered in the names of economically vulnerable individuals across Chittoor district.
Assistant Commercial Tax Officer Praveen Kumar, under the Sri City SEZ jurisdiction, confirmed that notices had already been issued to five individuals in the past two months, with the number expected to rise sharply.
"We may soon issue notices to nearly 100 persons. Most of them had no idea that businesses with large turnovers were operating in their names," the officer said.
He also revealed that a lorry driver transporting iron scrap to a factory near Gudur recently approached authorities after allegedly being intercepted and attacked by members linked to the fraud network.
Modus Operandi: Aadhaar, PAN Bought for Small Payments
According to GST officials, the fraud network followed a well-organised modus operandi:
- Aadhaar cards, PAN details and photographs were collected from gullible individuals
- Small payments of Rs 5,000 to Rs 10,000 were offered
- Fake mobile numbers and email IDs were used for GST registration
- Unauthorised access to DigiLocker accounts enabled document retrieval
- Bank accounts were opened in the victims' names
- Bogus invoices were generated to fraudulently claim ITC
"In most cases, fake bills for scrap purchases were sourced from Pernambat in Tamil Nadu, which were later layered through multiple entities to inflate ITC claims," Mr. Kumar said.
Multi-State Network with Chittoor as Entry Point
Investigators believe that while the fraud network spanned Andhra Pradesh, Telangana and Karnataka, Chittoor served as the primary hub for identity collection and company registration.
Records show that invoices were often generated using Hyderabad-based entities, while large financial transactions were routed through Bengaluru-linked bank accounts to conceal fund movement and evade detection.
Officials estimate that around 450 individuals in Chittoor district alone may have been affected. Many victims remain unaware that high-value GST registrations and inter-State transactions were carried out in their names.
Lapses in KYC and Registration Checks Under Scanner
Investigators have flagged serious lapses in banking KYC verification and GST registration processes, which allowed the racket to operate undetected for years.
Superintendent of Police Tushar Dudi confirmed that the case would be investigated as a multi-departmental probe, involving both State and Central GST authorities.
"We are receiving multiple complaints from the public. The matter is under investigation," the SP said.
Multi-Agency Probe Underway
Sources said special teams from State and Central GST departments have been deployed to examine:
- Bank account statements
- Call detail records (CDRs)
- IP address logs
- DigiLocker access trails
Officials involved in the probe estimate that over 50 individuals, including registration brokers, finance agents, digital service centre operators, and shell company handlers, may be directly or indirectly linked to the GST fraud.
Growing Concern Over Identity-Based Tax Frauds
The Chittoor case highlights a growing trend of identity-based GST fraud, where vulnerable individuals are exploited to create fake firms and claim unlawful tax credits. Authorities have urged the public to exercise caution while sharing personal documents and report any suspicious GST notices immediately.
The investigation is ongoing, and further arrests and recoveries are expected as the probe widens.
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