Lucknow News: Massive GST Fraud Unearthed, 131 Fake Companies Busted

Lucknow News: According to officials, the Central Goods and Service Tax (CGST) Commissionerate, Lucknow, dismantled a significant network of 131 shell companies that were engaged in making fraudulent shipments totaling 1355 crore and transferring ineligible input tax credits to recipient organisations across the nation.

Fictitious Supply Network Exposed Across 11 Uttar Pradesh Districts

These fictitious supply mostly featured garbage, scrap, plywood, and veneer as their main commodities. In order to avoid paying GST, these fictitious supplies were shown in the records to transfer recipient companies a benefit of 197.20 crore worth of invalid input tax credits. These fraudulent, nonexistent businesses that were registered with the GST claimed to have supplied products and services valued 1355.74 crore to over 1,100 recipient businesses across the nation, but the supply were false. According to Deepankar Aron, commissioner of the CGST & Central Excise Commissionerate, Lucknow, the majority of the receiving companies were based in Uttar Pradesh, Haryana, and Delhi. As part of the specific pan-Indian drive to bust syndicates involved in the establishment of fictitious companies in order to illegally claim GST benefits, this significant linkage was discovered in 11 districts of Uttar Pradesh. CGST personnel were mentioned in a press release as saying that CGST Lucknow carried out a significant operation in May, June, and July 2023.

131 Nonexistent Companies Discovered in CGST Verification Drive

They claimed that 647 businesses registered under the control of CGST, Lucknow, and located in the cities of Lucknow, Unnao, Hardoi, Shahjahanpur, Sitapur, Lakhimpur, Barabanki, Gonda, Balrampur, Bahraich, and Shravasti had their addresses physically verified. “During this drive, 131 firms were found to be ‘ghost’ firms or non-existent firms that had taken GST registrations on fictitious names and used forged documents. Different tricks were used to get these shell firms registered -some had fraudulently taken GST registration using PAN of some other persons while some had forged rent agreements or electricity bills and mentioned addresses that were non-existent,” explained a CGST official. He said that the tax authorities of each recipient company that accepted input tax credits from these fictitious, nonexistent companies had been notified in order to collect those input tax credits. The input tax credit (ITC) of 21.60 crore that was present in these fictitious, nonexistent organisations' credit ledgers was stopped to avoid misuse, and their GST registrations were suspended or revoked.

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