One arrested for Rs 14 crore GST refund fraud in Delhi

The Delhi government’s Department of Trade and Taxes has uncovered a Rs 14 crore GST refund fraud, leading to the arrest of a key accused, officials said on Sunday.

The probe revealed a sophisticated network behind the scam, where four fictitious firms were set up solely to fraudulently claim GST refunds under the guise of legitimate business operations.

According to officials, this marks the first time the department has employed advanced big data analytics and in-depth chain analysis — including the examination of banking transactions — to track the flow of illicit funds. The money trail extended beyond Delhi to other states and even international locations like Hong Kong and Singapore.

Investigators found multiple entities using the same PAN numbers, mobile phones, and email addresses as those registered by the fraudulent firms. The registration of these Delhi-based firms has been suspended, and details have been shared with authorities in other states for further action.

In collaboration with the Income Tax Department, the GST officials have flagged and recommended the blocking of PANs linked to the scam to prevent further misuse.

As funds have been traced to international accounts, the department is submitting a detailed report to the Department of Revenue, Government of India, for further action.

So far, Rs 1.16 crore has been recovered, and proceedings are underway to recover the remaining amount. Additionally, 45 bank accounts connected to 27 suspect entities have been frozen to stop further diversion of funds.

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An FIR has been filed with the Economic Offences Wing of the Delhi Police. The arrested individual, said to be the proprietor of one of the bogus firms, was apprehended in Delhi and remanded to police custody by a local court. More arrests are expected as the investigation progresses.

“This decisive action reaffirms our zero-tolerance approach to GST fraud,” a senior Delhi GST Department official said. “Such offences deplete public funds and undermine honest taxpayers. We remain fully committed to protecting the integrity of the GST system and cracking down on tax evasion.”

(With inputs from PTI)