State Authorities Unearth Organised Gst Fraud Network Spanning Firms In Ludhiana.

Jun10,2026 | Gautam Jalandhari | Ludhiana

Fraudulent ITC claims, forged tax documents & misuse of GST registrations detected;

Recovery of around 20 Crore effected from firms and ITC beneficiaries

"GST registrations granted as part of the Ease of Doing Business framework an initiative intended to simplify and encourage legitimate trade and commerce- were deliberately obtained through fraudulent documents or misused to build fictitious ITC chains and defraud the State exchequer."

The State Taxation Department, Punjab has unearthed a well-organized fraudulent Input Tax Credit (ITC) racket during a recent data-driven verification exercise organised network of GST fraud involving operating majorly across the Ludhiana.

While giving this information, Mrs Randhir Kaur DCST Ludhiana Division said that the detection of this network was made possible through analytical comparison of purchase data reflected in GSTR-2A/2B vis-à-vis the corresponding e-way bill records. The fraud pertains to fraudulent transactions, misuse of GST registration numbers, and circulation of fake or forged tax documents.

Investigations have revealed that these firms, which were granted GST registration numbers under the Government's "Ease of Doing Business" initiative an idea designed to facilitate legitimate trade and industry obtain GST registration through fraudulent documents or systematically misuse the said registrations to generate and pass on fictitious Input Tax Credit (ITC), causing substantial revenue loss to the State exchequer.

The modus operandi involved the issuance and circulation of fraudulent tax invoices without any actual supply of goods or services. These bogus invoices were used to avail and pass on inadmissible ITC, thereby defrauding not only the government but also genuine buyers in the supply chain. It was observed that several entities had reported substantial inward supplies in GSTR-2A/2B; however, either no matching e-way bills existed for the movement of goods or other grave discrepancies are there. This discrepancy raised suspicion regarding the genuineness of the transactions and led to a detailed investigation of the concerned firms.

During further scrutiny, it was found that the Goods and Services Tax Registrations (RCs) of these entities were obtained on the basis of fraudulent and manipulated documents. In some cases, when the purported original proprietor was contacted, he categorically denied any association with the said firm and stated that he had neither applied for nor authorized the use of his credentials for registration purposes.

Additionally, it was observed that the mobile numbers linked to these registrations were found to be associated with identities created using fake Aadhaar credentials. The bank account details furnished at the time of registration were also found to be unverified and not compliant with due validation norms.

Acting swiftly on the findings of the investigation, the Department has initiated the registration of First Information Reports (FIRs) against the accused persons and firms for offences involving fraudulently obtained GST registrations and wrongful availment and passing on of Input Tax Credit. As of the date, 20 FIRS have been registered in Division Ludhiana in connection with the fraud.

Further investigation into the network revealed that substantial amounts of fraudulent ITC had been passed on to multiple beneficiary firms, who subsequently utilized the same to discharge their tax liabilities.

In a major breakthrough, a recovery of more than 20 Crore from the firms involved or from the beneficiaries who availed or utilised the fraudulent ITC have already been affected. This recovery represents the tax liability unlawfully avoided through the fraudulent means and is a direct result of coordinated action by the State Tax Department.

It has come under scanner of Department that GST registrations granted to facilitate ease of doing business are getting weaponized by fraudulent documents at the time of application or to create fictitious ITC chains. The Department is ensuring that every such fraudulent entity is brought to book to safeguarding government revenue and ensuring strict action against entities involved in tax evasion and fraudulent practices under the GST regime.

State-Authorities-Unearth-Organised-Gst-Fraud-Network-Spanning-Firms-In-Ludhiana