Rs645 Crore GST ITC Scam: Syndicate Used 229 Bogus Firms, Delhi Kingpin Arrested

Moneylife Digital Team 14 November 2025

Economy & Nation

The Delhi zonal unit of the directorate general of goods and services tax (GST) intelligence (DGGI) has uncovered a large-scale racket involving fraudulent availment and passing of input tax credit (ITC) valued at around Rs645 crore. According to an official release, officers detected a network of 229 dummy GST-registered firms that were allegedly set up and controlled by a Delhi-based syndicate to generate fake invoices without any actual supply of goods or services.

The operation began after DGGI received credible information about the suspected tax evasion network. Acting on the tip-off, teams carried out coordinated search operations across multiple locations in Delhi. During the raids, officers seized a substantial cache of incriminating evidence, including digital devices, ledgers, documents and materials linked to the creation and operation of the bogus firms.

Officials reported recovering 162 mobile phones believed to have been used to obtain one-time passwords (OTPs) for GST and banking-related activities. The searches also yielded 44 digital signatures and more than 200 cheque books associated with various firms that existed only on paper. Investigators say this infrastructure was central to managing registrations, filing returns, operating bank accounts and issuing fake invoices to facilitate the fraudulent claiming of ITC.

Preliminary findings suggest the entities were part of a well-coordinated network created solely for issuing invoices without any movement of goods or provision of services. The fraudulent ITC generated through this mechanism resulted in a major loss to the national exchequer, the release said.

Investigators identified Mukesh Sharma as the key conspirator behind the elaborate operation. Evidence collected during the search operations and subsequent analysis pointed to his role in managing GST registrations, filing returns on behalf of the dummy companies, controlling their banking transactions and orchestrating the movement of funds through multiple layers to obscure the trail. According to DGGI, Mr Sharma also handled the records of several firms, ensuring that the invoices appeared legitimate on paper despite no underlying business activity.

Given the gravity of the offences, which fall under Sections 132(1)(b) and 132(1)(c) of the Central Goods and Services Tax (CGST) Act, 2017, Mr Sharma was arrested on 11 November 2025. These offences are classified as cognizable and non-bailable. He has since been remanded to judicial custody.

DGGI officials also indicated that the investigation has revealed a potential money-laundering angle. Proceeds generated through the fake ITC racket were allegedly diverted and rotated through a non-governmental organisation (NGO) and a political outfit. Authorities say these findings point to a wider financial network designed to disguise the origin of illicit funds.

The investigation is continuing, with officials examining the financial trails, digital records and the involvement of additional individuals or entities. DGGI says more arrests may follow as teams analyse the material seized during the raids and track the flow of funds linked to the bogus firms.

The exposure of the Rs645 crore ITC scam marks one of the most significant recent crackdowns on GST-related fraud, highlighting concerns over misuse of the registration system and the scale at which syndicates can operate using digital identities, shell entities and layered financial transactions. Further updates are expected as the probe progresses.

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