GST heist: Tax officer, lawyers defraud Delhi govt of $540mn

A ₹54 crore ($540mn) GST fraud has been unearthed in the national capital. The scam involved a rogue tax officer, three lawyers, and several accomplices who defrauded the GST Department. The Anti-Corruption Bureau of the Delhi Government exposed the racket.

A GST officer along with three lawyers, two transporters and the owner of a "company" were part of a plan involving 500 fake companies and fake invoices worth ₹ 718 crores ($7180 mn) to claim GST refunds worth ₹ 54 crores ($540mn).

The 500 companies were shell companies involved in a fraudulent scheme to obtain GST refunds by pretending to engage in the import and export of medical products.

The GST Officer (GSTO) Babita Sharma, came up with a plan with 96 fake firms and approved over 400 refunds worth ₹ 35.51 crore ($355mn) between 2021 and 2022.

Initially, only ₹7 lakh (8,338.20 USD) worth of refunds were approved in the first year, but the remaining amount was sanctioned subsequently.

Interestingly, the refunds were approved by the GSTO after filing the applications and approval was given within three days.

In 2021, Sharma was transferred to Ward 22 of the GST office and surprisingly, within a few days, over 50 firms applied for migration from Ward 6 to Ward 22, and were Okayed within a short period.

A surge in migration requests raised red flags, leading the GST Vigilance Department to inspect the involved firms. This investigation exposed a ₹54 crore GST scam orchestrated from within the department.

Notably, the fake firms generated invoices worth ₹ 718 crore, i.e. false acquisitions were made and business was only on paper, the probe found.

Refunds were issued without verification of invoices and Input Tax Credit (ITC) by the GSTO.

Of the 53 firms that migrated to Ward 22 after Babita's transfer, 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 trio ran 23 firms from an email ID and mobile numbers. The 23 firms handled by the lawyers generated fake invoices worth ₹ 173 crore (1730 mn).

(With inputs from agencies)