The Anti-Corruption Bureau of the Delhi Government exposed a ₹54 crore GST fraud in the city. The scam involved a rogue tax officer, three lawyers, and several accomplices who defrauded the GST Department.
The scale of the plan was staggering, involving 500 fake companies and fake invoices worth ₹ 718 crores (7180 mn) to claim GST refunds worth ₹ 54 crores (540 mn) by pretending to engage in the import and export of medical products.
The Mastermind
The GST Officer (GSTO) Babita Sharma devised a plan with 96 fake firms and approved over 400 refunds worth ₹ 35.51 crore (355 mn) between 2021 and 2022.
According to reports, only ₹7 lakh worth of refunds were approved in the first year, and the remaining amount was sanctioned gradually.
After filing the applications, the GSTO approved the refunds and approval was given within three days.
In 2021, Sharma was transferred to Ward 22 of the GST office. Within a few days, over 50 firms applied for migration from Ward 6 to Ward 22 and were approved.
Red Alert!
A sudden increase in migration requests alerted the GST Vigilance Department to inspect the involved firms. Upon investigation, a ₹54 crore GST scam orchestrated from within the department was found.
The probe found that the shell companies generated invoices worth ₹ 718 crore, indicating false acquisitions and a business that was only on paper. Refunds were issued without verification of invoices and Input Tax Credit (ITC) by the GSTO.
According to reports, the probe found that over 40 firms supplied goods in the first phase, but no records were available in the second phase. In the case of 15 firms, neither an Aadhar Card verification nor physical verification of the firm was done at the time of GST registration, which is mandatory as per the rules.
Of the 53 firms that migrated to Ward 22, 48 were given a GST refund of ₹ 12.32 crore (123.2 mn). The investigation uncovered that the fraudulent GST refunds were channelled into the bank accounts of three lawyers, Rajat, Mukesh, and Narendra Saini, as well as their relatives.
The 23 firms handled by the lawyers generated fake invoices worth ₹ 173 crore. Out of these 23 fake companies, seven were involved in the supply of medical goods and had shown business of ₹ 30 crore in their invoices.
