₹156 Cr GST Scam via Fake Firms What You Must Know
In a recent bust, tax authorities uncovered a ₹156 crore GST fraud involving fake firms issuing bogus bills. These firms were generating fraudulent Input Tax Credit (ITC) without any real supply of goods or services — a growing concern under India’s GST regime.
Let’s simplify what happened, how such frauds occur, and what businesses and consultants must do to stay on the right side of the law.
What Happened? – A Quick Breakdown
As per reports, 5 individuals were arrested in connection with this scam:
- ₹156 crore worth of fake invoices generated
- Bogus ITC claimed across multiple GSTINs
- No actual supply of goods or services
- Firms were non-existent or non-operational at registered addresses
- Action taken under Section 132 of CGST Act (punishable offence)
🔗 Source – PIB Press Release / CBIC Enforcement Zone
How Fake Billing Works Under GST
| Element | Real Business | Fake Firm Scam |
|---|---|---|
| GSTIN | Valid & actively used | Misused or created using dummy PAN/Aadhar |
| Invoices | For real goods/services | For non-existent supplies |
| E-way Bills | Match actual movement | Fabricated or not generated |
| ITC Claimed | Backed by real purchases | Claimed without purchases or delivery |
| Bank Trail | Legitimate business payments | Layered accounts, often dormant or closed |
Legal Angle: What the GST Law Says
Under Section 132 of CGST Act, 2017:
- Issuing fake invoices to claim or pass on ITC without supply is a cognizable and non-bailable offence if the amount exceeds ₹5 crore.
- Penalty includes arrest, prosecution and imprisonment up to 5 years.
Also, as per Rule 86A of CGST Rules, ITC can be blocked if there is a reason to believe it was fraudulently availed.
Practical Tips to Avoid GST Trouble
If you’re a business owner, accountant, or CA handling GST filings, here’s how to stay safe:
- Verify Vendors: Use the GST Portal to check GSTIN validity
- Check E-way Bill Consistency: Ensure goods movement aligns with invoices
- Cross-match GSTR-2B & Books: Avoid claiming ITC from fake vendors
- Avoid Dummy Billing Practices: Never raise invoices without actual supply
- File GSTR-1 and GSTR-3B consistently
Expert View: Red Flag Signals to Watch
Amit Khurana, GST consultant, says:
“If a vendor offers unrealistically low tax-inclusive prices or has recently registered but issues high-value invoices, treat it as a red flag. Run a due diligence check immediately.”
Government Crackdown is Rising
- Over ₹1.5 lakh crore in fake ITC detected since GST rollout
- AI and data analytics tools now track patterns in GST filings
- GSTN now flags risky taxpayers automatically
- New compliance checks introduced via FORM DRC-01B for ITC mismatches
FAQ – GST Fraud via Fake Invoices
Q1: Can I be held liable if my supplier is caught in fraud?
Yes. If you claim ITC based on fake invoices, you may be liable even if unaware.
Q2: What’s the penalty for claiming fake ITC?
Up to 5 years imprisonment, interest, and full ITC reversal.
Q3: Can ITC be blocked without notice?
Yes, under Rule 86A, based on credible information of fraud.
Conclusion
GST fraud via fake firms not only hurts the exchequer but also puts compliant taxpayers at risk. If you’re unsure about a vendor’s credibility or your ITC eligibility, don’t risk it.
Need help verifying GST compliance?
Reach out to Efiletax for a professional GST audit and filing support.
Summary
A ₹156 crore GST scam was busted involving fake firms issuing bogus invoices for input tax credit (ITC). Learn how such frauds operate, what the GST law says, how to avoid risk, and what businesses must do to stay compliant under India’s GST regime.