In a major crackdown on GST fraud, the Enforcement Wing (South Zone) of the State Commercial Taxes Department, in coordination with the Service Analysis and Intelligence Wing, has unearthed a massive fake Input Tax Credit (ITC) cartel involving fraudulent transactions worth ₹2,384 crore. Two key accused have been arrested in Bengaluru.

Acting on specific intelligence inputs, officials exposed a highly organised fake invoicing racket allegedly operating through bogus firms engaged in the trading of Tungsten Carbide scrap, e-waste and other scrap materials.

According to the department, Saleemulla Baig, 49, proprietor of SKS Traders, allegedly availed fake ITC through 72 bogus supplier entities involving suspicious business turnover of nearly ₹2,172 crore and fraudulent ITC claims amounting to around ₹382 crore.

Similarly, Hassain Baig, 35, associated with K.H. E-waste Recycler at Nayandahalli, was found to have availed fake ITC from 55 bogus supplier entities involving suspicious turnover of approximately ₹212 crore and fraudulent ITC of nearly ₹38 crore.

Both accused have been arrested under provisions of the GST Act.

Officials said the investigation has so far identified a fake invoicing network comprising 127 bogus entities, collectively linked to suspicious transactions worth around ₹2,384 crore and fraudulent ITC claims totalling nearly ₹420 crore.

Investigators also found that one of the principal firms in the network showed an abnormal rise in declared turnover from around ₹50 crore to ₹945 crore within three financial years despite lacking adequate business infrastructure or evidence of actual movement of goods, indicating large-scale paper transactions and circulation of fake tax invoices.

A significant part of the fraud reportedly involved high-value Tungsten Carbide scrap transactions, along with e-waste and scrap trading activities. The Tungsten Carbide transactions alone accounted for suspicious turnover of nearly ₹217 crore and fake ITC claims of about ₹39 crore.

The department further revealed that whenever authorities initiated action, such as blocking ITC or issuing notices, the accused allegedly floated fresh bogus firms to continue fraudulent activities and evade detection.

The operation is being jointly supervised by the Additional Commissioner of Commercial Taxes (Enforcement) and the Additional Commissioner of Commercial Taxes, Service Analysis and Intelligence Wing.

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