The investigation, which stems from an ongoing case initiated in Bengaluru, found that the shell companies had no actual business activity and were set up with the sole purpose of generating fake invoices and engaging in circular trading to inflate turnover. One of these companies had even been listed on the stock exchange.
According to officials, four of the companies were found to have claimed receipt of goods and services worth hundreds of crores despite having no physical operations. The trail led investigators to a key figure, a chartered accountant who had also served as a statutory auditor and director in several of the implicated entities. The individual is believed to have orchestrated the transactions, manipulated the shareholding patterns, and maintained control over the operations behind the scenes.
Searches conducted at multiple locations yielded crucial evidence, including original invoices, company seals, and other incriminating documents - many of which were found in possession of the arrested mastermind.
A DGGI official stated, "This fraud not only involves large-scale tax evasion but also has serious implications for investors, particularly in the listed company associated with this scheme."
The DGGI Bengaluru unit has now launched a full-scale investigation to identify further linkages and potential accomplices. With fraudulent input tax credit claims becoming a recurring tactic among shell entities and listed companies, the DGGI has also shared specific intelligence with the Securities and Exchange Board of India for regulatory action.
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