Nationwide raids find bogus firms, fraudulent GST claims

In a joint operation, the Director General of GST Intelligence and the Director General of Revenue Intelligence have found dozens of bogus firms and exporters who were fraudulently claiming Integrated Goods and Services Tax (IGST) from the government.

The raids were conducted on Wednesday by 1,200 officers at 336 different locations spread across 27 cities. It showed a potential fraud of around INR470 crore of input tax credit on an invoice of INR3,500 crore. Most of these firms were small businesses.

“Out of the 198 companies we checked, 78 did not exist,” said a top government official aware of the matter who did not wished to be named. The largest cache of bogus firms were found in west Delhi. Of the 53 firms searched in the capital, 46 did not exist.


In searches in Mumbai, a housewife was found to be a front for a company; in another case a tuberculosis patient who needed INR10,000 worth of monthly medicines was the frontman; and in another case, the team found a drunkard the “owner” of a firm.

“They are proprietors of export firms, can you believe it?” this official asked. These exporters had created multiple small firms to keep transactions below INR1 crore and, therefore, away from the eyes of tax officials.

Some exporters were exporting goods on payment of IGST almost entirely out of the input tax credit availed on the basis of fake supplies. Besides such IGST payment was being claimed as a refund on exports.

“This government was well aware of this and we used data analytics to figure out which all transactions were suspicious. While government is allowing ease of doing business you cannot shortchange the honest taxpayers. The next round of raids will take place soon. Another list is being prepared,” this official added.