Delhi Government’s Department of Trade and Taxes, has uncovered a major case of Goods and Services Tax (GST) refund fraud amounting to approximately Rs 14 crore.
The investigation revealed a network of individuals who had created and operated four fictitious firms solely to illegitimately claim GST refunds under the guise of genuine business activities.
This case marks a first-of-its-kind operation by the Department, where cutting-edge big data analytics and detailed chain analysis, including scrutiny of banking transactions, were employed to trace the flow of funds across multiple entities located within Delhi, other states, and even international jurisdictions such as Hong Kong and Singapore.
The Department’s data-led investigation identified multiple entities using the same PAN, mobile numbers, and email addresses as those used by the fraudulent firms. As an immediate enforcement measure, the registration of Delhi-based entities has been suspended. Additionally, information has been shared with jurisdictional authorities in other states for further action against entities operating in their areas.
In coordination with the Income Tax Department, the Department has also flagged and recommended the blocking of PANs associated with the fraudulent activities, thereby restricting further misuse. As money has been traced out to entities located outside India, therefore, a detailed report is also being submitted to the Department of Revenue, Government of India, for necessary action.
“Swift recovery efforts were also launched following the detection of the fraud. So far, Rs 1.16 crore has been successfully recovered, and ongoing proceedings are underway to retrieve the remaining amount. The Department has also frozen 45 bank accounts linked to 27 implicated entities, effectively preventing further movement or diversion of illegal funds.
In response to the serious nature of the offence, an FIR has been lodged with the Economic Offences Wing (EOW) of the Delhi Police.
In a significant development, one of the key accused, Bunty (son of Harish Chander), proprietor of one of the fraudulent firms, has been arrested from Delhi. He was produced before the Metropolitan Magistrate’s Court, where police custody was granted. Further arrests are anticipated as investigations continue.
Reacting to this, a senior official from the Delhi GST Department stated: “This decisive action reaffirms our zero-tolerance approach to GST fraud. Such offenses not only drain public resources but also place an unfair burden on honest taxpayers. The Department remains resolutely committed to protecting the integrity of the GST system and will continue to pursue all forms of tax evasion with full legal force.â€
“This landmark case also highlights the Department’s evolving capabilities in leveraging advanced analytics and inter-agency coordination to detect and act against complex tax fraud. The Department reiterates its strong commitment to maintaining the integrity of the GST regime and warns that any attempts to defraud the system will be met with immediate and strict legal consequences,†Delhi government in a statement.
