Assam GST Officer Cracks ₹870 Crore Evasion Racket
A senior Assam GST officer was recently honoured for unearthing a massive ₹870 crore fake ITC scam. This case sheds light on how fake GST invoicing networks operate — and why every business must double-check its GST practices.
Let’s break it down for Indian taxpayers, consultants, and CA firms.
What Was the ₹870 Crore GST Scam in Assam?
According to official sources from Assam State Tax Department, the officer tracked a well-orchestrated racket involving fake GST registrations and bogus invoices. The goal: to claim Input Tax Credit (ITC) without actual supply of goods or services.
Key highlights:
- ₹870 crore bogus ITC unearthed
- Over 3,000 fake GSTNs involved
- Scam linked to Pan-India fake firms
- Fraudsters used dummy Aadhaar, PAN, and electricity bills
- No actual business activity — only paper trail
This case mirrors similar national crackdowns based on CBIC’s risk-based AI red flag systems.
How Do Fake GST ITC Scams Work?
Here’s a simple breakdown of how these rackets operate:
| Step | Method Used |
|---|---|
| 1 | Fake GST registration using fake KYC |
| 2 | Create bogus invoices with GST |
| 3 | No real supply of goods/services |
| 4 | Claim ITC on paper without tax paid |
| 5 | Pass on ITC to other firms |
| 6 | Disappear before detection |
Such scams not only defraud the exchequer but also risk genuine buyers’ ITC claims, especially if their vendors are unknowingly fake.
Legal Angle: GST Rules & Enforcement Action
Key Legal Provisions Invoked:
- Section 132 of CGST Act: For arrest in case of fraudulent ITC above ₹5 crore
- Rule 86A of CGST Rules: Allows blocking of electronic credit ledger if fraud suspected
- Section 122–125: Penalties for issuing fake invoices
In this Assam case, multiple arrests were made under Section 132. Many GSTNs were also cancelled post verification under Rule 9 of the CGST Rules.
Source: Assam GST Official Site
What Can Genuine Taxpayers Learn?
Whether you’re a trader, startup founder, or CA managing GST clients, these scams pose real compliance risks. Here’s what you must do to stay safe:
Vendor Due Diligence
- Use GSTN verification tools before onboarding suppliers
- Check GSTR-2B matching monthly
- Insist on e-way bills and real transport details
File Timely & Match ITC
- Avoid booking ITC if not reflecting in GSTR-2B
- Keep track of vendor filing compliance
- Use automated reconciliation tools
Stay Updated on Fake Registration Alerts
- Follow updates from GSTN portal
- Subscribe to CBIC or state tax department circulars
Expert View: Don’t Just Rely on GSTR-2A/2B
GST consultant’s tip:
“Many businesses assume GSTR-2B = eligible ITC. But if the supplier is bogus, your ITC is at risk — even if it shows up in the portal. ITC eligibility also depends on actual receipt of goods/services and valid tax payment upstream.”
This aligns with the Supreme Court’s view in Edelweiss Financial Services v. Union of India where substance over form is key in tax compliance.
Assam Case: What It Means Nationally
This isn’t just a state issue. The ₹870 crore racket reinforces what CBIC and GSTN have been warning for months — fake registrations and ITC frauds are a national threat.
The government is:
- Integrating AI-based red flagging systems
- Using Aadhaar+PAN biometric matching for new GST registrations
- Cracking down via joint state-centre enforcement cells
FAQ: GST Evasion and Fake ITC
Q1. How do I verify if my supplier is genuine?
Use the “Search Taxpayer” tool on gst.gov.in and check past filing records in GSTR-1 and GSTR-3B.
Q2. Is ITC allowed if invoice is genuine but supplier defaults?
As per multiple High Court rulings, you may lose ITC if tax is not paid upstream — despite having invoice.
Q3. Will I get a notice if my supplier is part of a fake ITC chain?
Yes. GST officers can issue DRC-01A or ASMT notices even if you’re not directly involved.
Final Word
The ₹870 crore Assam GST fraud is a wake-up call. Fake ITC chains can bring genuine businesses under scrutiny. Stay vigilant. Keep vendor records clean. Match your ITC properly.
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Summary
Assam GST officer uncovered a ₹870 crore fake ITC scam using bogus firms and fake registrations. Learn how such frauds work, how they impact genuine businesses, and what steps you can take to protect your Input Tax Credit under GST law. Stay compliant with Efiletax expert support.