The Directorate General of Goods and Services Tax Intelligence (DGGI) of Jaipur busts in to the Input Tax Credit (ITC) rackets operating in 14 states through 549 fake firms involving bogus ITC claim of Rs. 1,047 crores. The officials have traced the mastermind of the racket in Delhi and arrested.
A total of 549 counterfeit companies were established by the group, which enabled them to make substantial fraudulent claims for Input Tax Credit (ITC). The main orchestrator of this scheme, Mr. Rishabh Jain, a 30-year-old individual residing in Delhi, recruited 10 employees to manage these fictitious companies. Through thorough reconnaissance and data analysis, the authorities from the DGGI in Jaipur successfully tracked down and apprehended the mastermind in Delhi.
The method of operation suggested that the syndicate has a strong connection with multiple brokers who facilitate the acquisition of companies, bank accounts, SIM cards, and manage their real-time gross settlement (RTGS) or cash transfers.
These brokers also acted as intermediaries between the syndicate and beneficiary firms. Some brokers or agents specialize in registering companies on the Goods and Services Tax Network (GSTN) using the identities of vulnerable individuals, and then sell these registered companies to the syndicate. Subsequently, the syndicate utilizes these companies to generate fraudulent invoices.
The network has created invoices with a total taxable revenue of Rs. 6,022 crore and an associated total Input Tax Credit (ITC) of Rs. 1,047 crore through these 569 bogus entities. To more than 2,000 beneficiary companies, these invoices were sent.
While they also have operations in 13 other states, including Rajasthan, Uttar Pradesh, Punjab, Bihar, Jharkhand, Gujarat, Maharashtra, Haryana, West Bengal, Karnataka, Goa, Assam, and Uttarakhand, the majority of these bogus businesses are based in Delhi. As of right now, officials have confiscated 73 bank accounts connected to the network and the involved brokers.
Shri Rishabh Jain was detained on June 25, 2023, and he was brought before the Economic Offence Court in Jaipur. He is currently being held in judicial custody until July 7, 2023.
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