Fake GST registration racket uses job portal to create shell firms, busted

Gurgaon: Central Goods and Services Tax (CGST) has uncovered a major fake GST registration racket in which a job portal was allegedly used as a tool to obtain personal documents and create shell firms.The fraud came to light after coordinated searches were carried out at multiple premises in Burari, Swaroop Nagar and Mukundpur in North Delhi, based on intelligence inputs about suspicious GST registrations. According to officials, investigators tracked the IP addresses used to file the fraudulent registrations, which led them to the locations where the accused was operating.
One person was arrested on Monday under provisions of the Central Goods and Services Tax Act, 2017. He was produced before the Judicial Magistrate First Class (JMFC) court in Gurgaon, which, considering the seriousness of the offence, remanded him to three days' judicial custody.Officials did not share more details about the arrest since the investigation is still in progress.During the searches, officers seized phones, laptops, SIM cards and documents, besides recovering Rs 45 lakh from the accused's residence. Probe findings revealed that the accused allegedly used the job portal Job Hai to advertise vacancies for security guard jobs.According to officials, the accused used the job portal Job Hai to collect KYC documents of unemployed people. When applicants responded, their identity documents were collected under the pretext of employment verification. Investigators later found that these documents were used without the knowledge of the applicants to obtain GST registrations and create fake companies.A CGST official said the accused used forged and misused documents to obtain registrations of shell entities that existed only on paper. "These firms were then used to generate invoices without actual supply of goods or services, enabling fraudulent claims under the GST system," said the officer.So far, investigators have identified 24 fake firms under the CGST Gurgaon jurisdiction. These entities collectively generated fake invoices worth Rs 734.95 crore. Through these transactions, the accused allegedly availed fraudulent Input Tax Credit (ITC) of Rs 143.05 crore and passed on ITC amounting to Rs 174.72 crore to other entities. Further investigation revealed that the accused applied for registration of around 1,400 fake firms, indicating the potential scale of the racket.ITC is a core mechanism under the GST regime that allows businesses to claim credit for the tax paid on inputs or purchases and adjust it against the tax payable on their final output. The system is designed to avoid cascading taxation by ensuring that tax is paid only on value addition at each stage of the supply chain.However, in cases of ITC fraud, shell companies are created to generate fake invoices showing transactions that never actually occurred. These invoices are then used by other firms to claim tax credit fraudulently, reducing their tax liability and causing losses to the government exchequer. These networks typically involve multiple entities issuing invoices to each other without real movement of goods or services.