ED Arrests Two in Massive Rs 5,000 Crore GST Fraud Case
The Enforcement Directorate has arrested two individuals in a massive GST Input Tax Credit fraud involving 135 shell companies and bogus invoices.
The Enforcement Directorate (ED) has apprehended two individuals as part of a high-stakes investigation into a sophisticated GST Input Tax Credit (ITC) fraud. This crackdown follows a detailed probe into a massive syndicate that allegedly manipulated the tax system to siphon off enormous sums of money through fraudulent means.
A Web of 135 Shell Companies
The investigation, which was triggered by complaints from the Directorate General of GST Intelligence (DGGI) in Jamshedpur, Jharkhand, uncovered a complex criminal network. According to the federal agency, the syndicate operated a vast web of 135 shell companies. These entities existed only on paper and were used to issue bogus invoices totaling more than Rs 5,000 crore, despite no actual goods or services ever being supplied.
By employing this deceptive modus operandi, the group managed to generate and pass on fake ITC amounting to over Rs 734 crore. This illicitly obtained credit was reportedly sold for a commission to various beneficiary firms, allowing them to evade their legitimate GST liabilities.
The Arrests and Modus Operandi
The two individuals arrested by the ED's Ranchi Zonal Office have been identified as Gyaan Chand Jaiswal (alias Babloo Jaiswal) and Raaj Jaiswal. Following a search and seizure operation on September 30, they were produced before a Special PMLA Court in Ranchi on October 1, where they were remanded to judicial custody.
The agency's findings suggest that the group led by Gyaan Chand and Raaj Jaiswal were primary beneficiaries of the scam. To facilitate the fraud, they incorporated several entities, including:
- Maa Sharda Endeavours Pvt Ltd
- Makers Casting Pvt Ltd
- Kedarnath Trexim Pvt Ltd
- Jai Bhole Enterprises (registered in the name of an employee)
The ED revealed that approximately Rs 54.33 crore in fake ITC was routed through these specific entities. This money was eventually layered into the personal bank accounts of the accused, their relatives, and various other entities. Investigators suspect these proceeds of crime were used to fund business activities and acquire various movable and immovable properties.
Ongoing Investigation and Seizures
The crackdown involved extensive searches across multiple locations, including residential and office premises in Jamshedpur, Jharkhand, and Kolkata, West Bengal. During these operations, officials seized various digital devices and incriminating documents under the Prevention of Money Laundering Act (PMLA).
This is not the first wave of action in this case. Previous searches conducted in May and August resulted in the seizure of cash and the freezing of bank balances totaling nearly Rs 70 lakhs. Additionally, the ED has issued Provisional Attachment Orders (PAOs) for properties valued at more than Rs 20 crore.
Earlier in the investigation, four other individuals were arrested under the PMLA on May 8, with three currently remaining in judicial custody. A prosecution complaint has already been filed before the Special PMLA Court in Ranchi, and the legal proceedings are currently at the trial stage.