In one of the most sophisticated GST frauds in recent years, law enforcement agencies have uncovered a scam involving fraudulent input tax credit (ITC) claims worth Rs 157.22 crore. The prime accused, Sarabjit Singh, an accountant from Ludhiana, remains absconding even as authorities tighten the noose around a network of fake firms and dummy directors.
According to officials, Sarabjit Singh floated 20 bogus firms using the credentials of unemployed youth and daily wage labourers. These entities, existing only on paper, were used to conduct fraudulent transactions totaling Rs 866.67 crore between 2023 and 2025. The entire operation was meticulously planned, leveraging fake invoices and sham commercial activity to illicitly claim ITC from the government.
Luring the Vulnerable
Investigations reveal that Singh and his aides promised Rs 800 per day to over 20 economically vulnerable individuals in exchange for access to their Aadhaar and bank details. These accounts were then used to obtain GST registrations, open new bank accounts, and generate bogus invoices - forming the backbone of the tax scam.
"These people were earning less than Rs 500 a day and had no idea how their identities were being misused in one of Punjab's biggest tax frauds," said a senior taxation officer.
Year-Wise Breakup of the Fraud
- In FY 2023-24, fraudulent transactions worth Rs 249 crore resulted in fake ITC claims of Rs 45.12 crore.
- In FY 2024-25, sham transactions of Rs 569.54 crore led to ITC claims of Rs 104.08 crore.
- In the first two months of FY 2025-26 alone, Rs 47.25 crore in fake transactions were recorded, with Rs 8.01 crore claimed in ITC.
The scam came to light after a detailed investigation by the State Intelligence and Preventive Unit (SIPU), which registered an FIR in Ludhiana. While Sarabjit Singh remains on the run, two of his close associates have been arrested.
Crackdown Underway
Punjab Finance Minister Harpal Singh Cheema confirmed the recovery of critical evidence, including:
- Unsigned cheque books
- Pre-filled NEFT forms
- Fake invoice books
- Rs 40 lakh in unaccounted cash
Cheema added, "We are scrutinizing e-way bills, ITC claims, and cross-referencing with suspected beneficiary firms. SIPU is being further strengthened to detect and prevent such frauds at an early stage."
Another Scam Surfaces: Maa Durga Roadlines Under Scanner
In a related crackdown, the Department of Taxation exposed another GST fraud involving Maa Durga Roadlines, a Ludhiana-based transporter. The company allegedly issued fake e-way bills to show fictitious goods movement worth Rs 168 crore. The transactions involved high-value commodities such as copper, tobacco, and iron & steel scrap.
Using credentials of Ludhiana firms, the transporter falsely recorded goods movement from Delhi to Ludhiana-without any vehicles actually crossing state borders. Authorities suspect that this scam alone resulted in fraudulent ITC claims of Rs 30.66 crore.
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