GST fraud racket busted in Kanpur, Rs 250 crore transactions detected; two held

Kanpur (UP), Mar 3 (PTI) The Kanpur police have unearthed an organised GST fraud racket in which the accused allegedly used identity documents of poor and unsuspecting individuals to float fake firms and route transactions worth nearly Rs 250 crore, a senior official said on Tuesday.

Two people have been arrested while five others are absconding, they said, adding that the fraud appears to be part of a wider inter-state tax evasion network.

The arrested accused have been identified as Kapil Mishra and Amardeep alias Raj.

Addressing a press conference, Police Commissioner Raghubir Lal said the gang targeted e-rickshaw drivers, students and economically weaker persons by luring them with promises of easy loans.

"The accused collected PAN, Aadhaar and signed documents on the pretext of arranging loans. These were later misused to register fake firms, obtain GST numbers and open bank accounts to commit large-scale Input Tax Credit (ITC) fraud," he said.

The racket came to light after a resident of the Nazirabad area, Anurag Verma, complained that documents he had submitted while seeking a loan for his sister's wedding were being misused.

A probe by the Cyber Cell revealed that a company had been registered in his name without his knowledge and financial transactions were being carried out through it.

Technical investigation involving bank account analysis, call detail records and digital transaction tracking exposed a structured network operating multiple shell companies using stolen identities.

In one case, police traced transactions worth Rs 117 crore to a bank account opened in the name of Ujjawal Gupta, son of an e-rickshaw driver from neighbouring Unnao district.

The officials said the family had unknowingly submitted documents while seeking a medical loan and had no knowledge that a firm and bank account were operating in their name.

The police said many victims were students, daily wage earners and private employees who were completely unaware that companies existed in their names.

Investigations suggested that the accused registered shell firms using forged rent agreements and utility documents. These firms existed only on paper and issued fake invoices without any actual supply of goods or services.

Fake e-way bills were generated and invoices circulated among interconnected firms to inflate turnover and claim fraudulent ITC benefits.

The illegally obtained tax credit was then used to reduce tax liabilities or obtain GST refunds, with funds routed through multiple accounts to project them as legitimate, Lal said.

During raids, police recovered 30 mobile phones, fake SIM cards, 52 keys, signboards of firms, cheque books, ATM cards, registration documents, digital devices and vehicles, indicating the operation of numerous bogus firms from limited premises.

Authorities have frozen around Rs 1.5 crore lying in bank accounts linked to three fake firms. So far, 38 fraudulent companies have been identified and further financial scrutiny is underway, the commissioner said.

The police said coordination with GST authorities and banks is in progress for action related to tax evasion and financial fraud.

Cases have been registered under charges of cheating, forgery and other relevant provisions of law, and efforts are on to trace the remaining members of the racket.

The officials said more disclosures are expected as the investigation progresses. PTI COR KIS NB NB NB