The Madhya Pradesh Economic Offences Wing (EOW) has unearthed a massive ₹34 crore input tax credit (ITC) scam involving fake firms and fraudulent registrations. The alleged kingpin, Vinod Kumar Sahay, was arrested from Ranchi, the capital of Jharkhand, and was presented before the Jabalpur district court on Friday. He has been remanded to police custody until July 2, 2025.
Fake Loan Promise Used to Collect Personal Documents
The accused reportedly lured unsuspecting individuals from Indore, Bhopal, and Jabalpur by promising loans. Victims were told that GST registration was mandatory to process these loans. Using this pretext, the fraudsters collected sensitive personal documents like Aadhaar cards, PAN cards, bank statements, electricity bills, land documents, and photographs.
Unbeknownst to them, these documents were used to create fake GST-registered firms in their names. These shell companies existed only on paper and showed fake sales and purchases to illegally claim ITC without any actual movement of goods or services.
Scam Uncovered After Jabalpur Resident Files Complaint
The fraudulent scheme came to light when Pratap Singh Lodhi, a Jabalpur resident, filed a complaint. Preliminary investigations by Assistant Commissioners Vaishnavi Patel and Jyotsna Thakur of the Commercial Tax Department revealed signs of a well-organized conspiracy.
It was discovered that during 2019-2020, the accused operated under the alias NK Khare and duped several individuals, including Deendayal Lodhi, Ravikant Singh, and Nilesh Kumar Patel, in addition to the complainant.
Fake Firms Registered Across Madhya Pradesh
Four shell firms were found to be central to the scam:
- M/s Maa Narmada Traders (in the name of Pratap Singh Lodhi)
- M/s Namami Traders (in the name of Deendayal Lodhi)
- M/s Maa Rewa Traders (in the name of Ravikant Singh)
- M/s Abhijeet Traders (in the name of Nilesh Kumar Patel)
All these entities were registered between August 2019 and February 2020. Site inspections confirmed that none of the registered addresses hosted any business activity, confirming the firms were fictitious.
₹33.80 Crore Worth of Fake ITC Passed On
Sahay generated fake invoices worth crores under these bogus entities and used them to pass on ITC benefits to other businesses. Authorities noted that he retained full access to the firms' login credentials, email IDs, passwords, and mobile numbers, allowing him to manipulate the system and circulate fraudulent bills.
The financial scale of the scam currently stands at ₹33.80 crore.
Larger Inter-State Network Suspected
Authorities believe the operation may be part of a wider inter-state tax evasion network, and further arrests are expected. Investigations are ongoing to identify the recipient businesses that illegally claimed ITC using fake invoices issued by these shell companies.
This case has highlighted critical vulnerabilities in the GST registration and ITC claim process, with officials calling for tighter safeguards and verification mechanisms to prevent misuse.
CAclubindia
