GST Department Alleges Fake Invoices Used to Wrongfully Avail Input Tax Credit
The Goods and Services Tax (GST) Department has arrested Lakshmi Prasad Yerneni (56), Managing Director of Ecoren Energy India Pvt. Ltd., in connection with an alleged ₹64.5 crore Input Tax Credit (ITC) fraud. Authorities allege that the company fraudulently availed and utilised ITC by using fake tax invoices without any actual supply of goods or services, resulting in a substantial loss to the government exchequer.
Officials say the case is part of a wider investigation into an alleged network of companies suspected of generating fabricated transactions to exploit the GST system through bogus documentation.
The case highlights the continued focus of tax authorities on organised fake ITC fraud and underscores the importance of compliance, forensic investigations, and auditing services in india in safeguarding the integrity of the GST framework.
GST Investigation Points to Alleged Fake ITC Network
According to GST officials, preliminary investigations indicate that the alleged fraud was carried out through multiple interconnected companies.
Investigators allege the entities created fabricated transactions designed to appear as legitimate business activities while enabling wrongful claims of input tax credit through fake invoices.
The allegations remain under investigation.
Managing Director Arrested and Remanded
Officials stated that Lakshmi Prasad Yerneni was arrested in the early hours of Friday and later produced before the Economic Offences Court in Hyderabad.
The court remanded him to judicial custody until August 7, after which he was lodged in Chanchalguda Central Prison.
Charges Under the CGST Act
The accused has been booked under:
- Section 132(1)(c) of the Central Goods and Services Tax (CGST) Act.
- Section 132(1)(i) of the CGST Act.
- Corresponding provisions of the State GST law.
According to officials, because the alleged tax evasion exceeds ₹5 crore, the offence is classified as cognisable and non-bailable under the CGST Act.
Investigators Examine Management Decisions
According to investigators, during questioning Yerneni allegedly stated that final authority for:
- Vendor onboarding
- Work order approvals
- Purchase order approvals
- Advance payment approvals
rested with him.
Authorities allege this authority was misused to approve transactions supported by fake invoices, enabling fraudulent ITC claims without genuine supplies of goods or services.
These allegations have not yet been tested in court.
Financial Trail Under Scrutiny
Officials allege that funds were routed through multiple bank accounts to create the appearance of genuine commercial transactions.
Investigators are examining:
- Banking records
- GST returns
- Digital records
- Tax invoices
- Financial statements
to trace the movement of funds and identify any additional beneficiaries.
Wider Probe Continues
The GST Department believes the investigation may extend beyond a single company.
Authorities are examining the possible involvement of:
- Associated companies
- Suppliers
- Facilitators
- Other entities linked to the alleged fake ITC network
Officials stated that further legal action may follow if additional evidence emerges during the investigation.
Fake ITC Fraud Remains a Major Enforcement Priority
Tax experts note that fake ITC fraud remains one of the most significant compliance challenges under the GST regime.
Such schemes often involve:
- Shell companies
- Fake invoicing
- Paper transactions
- Layered banking trails
Enforcement agencies increasingly rely on:
- Data analytics
- E-invoicing systems
- Banking intelligence
- Digital forensic audits
to detect organised tax fraud and strengthen GST compliance.