Ghaziabad GST Scam: 40 Fake Firms Exposed in ₹410-Crore Fraud

GST Fraud of ₹410 Crore Exposed in Ghaziabad as Network of 40 Fake Firms Uncovered

Ghaziabad: The Central Goods & Services Tax (CGST) Department has exposed a massive tax fraud involving the creation of 40 shell companies used to generate fake invoices worth ₹410 crore. The racket, allegedly operated by Muradnagar-based advocate Vinay Singh, enabled the wrongful availing of ₹73.70 crore in Input Tax Credit (ITC). Singh has been arrested under Section 69 of the CGST Act, while investigators say the network represents a highly structured and coordinated fraud ecosystem.

Data Analytics Triggered the Investigation

CGST officials said routine data analytics flagged unusual billing activity and massive ITC claims from entities with no business operations, no stock and no genuine supply chain.
Under the supervision of Commissioner Sanjay Lavania, Additional Commissioner Sahil Seth and Assistant Commissioner Sanjeev Rishi, investigators uncovered that:

• Forty firms were registered using forged or misused documents.

• None of the entities showed physical activity or stock movement.

• Fake invoices amounting to ₹410 crore were generated solely to pass on ITC.

• Fraudulent ITC worth ₹73.70 crore was availed through these paper transactions.

Field inspections across Ghaziabad, Noida and Delhi confirmed that many listed business premises were non-existent or entirely inactive.

Centralised Control: IDs, Passwords and OTPs Held by Accused

During interrogation, Singh allegedly confessed to collecting identity documents from multiple people — some knowingly, others unknowingly — and using them to register the firms.
Investigators found that:

• Singh controlled all GST credentials, including user IDs, passwords and OTPs.

• Individuals in whose names firms were registered were unaware of their involvement.

• Some had submitted documents believing they were applying for welfare schemes or jobs.

• Twenty out of the forty firms were found completely non-operational, while the rest failed to produce stock details, books of accounts, GST returns or proof of legitimate trade.

Possible Corporate Beneficiaries Under Scanner

Officials believe that established companies may have used the fake firms as dummy suppliers to illegitimately claim ITC. The investigation is examining:

• Whether large enterprises routed fake invoices to inflate purchases.

• If shell companies acted as pass-through units to circulate overlapping transactions.

• The role of intermediaries, accountants or corporate facilitators.

Authorities say the financial scale indicates a multi-layered network, and more arrests are likely.

Identity Theft Emerges as a Key Component of the Fraud

CGST teams reported that several individuals whose documents were used had no idea GST registrations existed in their names.
Officials say the case highlights:

• Widespread misuse of personal documents obtained through routine paperwork.

• A new pattern of digital identity-based fraud fueling large-scale tax evasion.

• An emerging risk area for GST enforcement nationwide.

Investigation Expands Across Multiple States

The department is now analysing:

• Bank account trails of all 40 firms

• GST portal activity logs

• E-way bill records and movement patterns

• Beneficiary firms receiving fraudulent ITC

The inquiry may soon widen to Delhi, Haryana and Western Uttar Pradesh as investigators follow the transactional footprints.

Large-scale GST fraud cases like this highlight how crucial transparent records, internal controls and financial verification processes are for any business. Many organizations rely on structured auditing services in India to detect irregularities early, ensure compliance and safeguard against tax-linked vulnerabilities.

Shunyatax Global remains committed to helping enterprises build stronger financial governance and navigate complex regulatory landscapes with confidence.