Ahmedabad/New Delhi: A man accused of orchestrating a GST refund fraud worth around Rs 1,825 crore has been arrested at Indira Gandhi International Airport in New Delhi after returning from Dubai, officials said on Monday.
Kapil Chugh was apprehended on Sunday by officials of the Directorate General of GST Intelligence (DGGI), Ahmedabad Zonal Unit.
According to officials, he had evaded the investigation, failed to respond to 22 summonses issued by the agency, and fled to Dubai after carrying out the alleged fraud across multiple jurisdictions.
The investigation found that Chugh, along with his associate Vipin Sharma, devised and operated a structured arrangement to fraudulently avail of input tax credit (ITC) and encash it through refund claims linked to zero-rated supplies.
Authorities said Chugh controlled the network through dummy firms, employees, and close associates.
Officials stated that the firms involved were created using borrowed KYC documents and were non-functional, lacking infrastructure, manpower, and genuine business activity at their declared premises.
The listed proprietors or directors acted as name lenders and were paid fixed monthly cash amounts, while all key operations, including GST registration, invoice generation, banking transactions, filing of returns, and submission of refund claims, were handled centrally.
The probe revealed that fraudulent ITC was generated using fake purchase invoices, with no actual receipt of goods.
High-value tobacco products were shown in invoices to create substantial ITC, which was then circulated through multiple intermediary firms to form layered transactions.
This process enabled the introduction of ineligible ITC into the GST system and its accumulation in selected entities projected as exporters, particularly from the Kandla Special Economic Zone.
Parallel to these transactions, investigators found that low-value tobacco, inferior smoking mixtures, and other products were procured locally at nominal prices, often without invoices, and misdeclared as high-value goods such as kimam and jarda for export at inflated values.
No manufacturing facilities were found to justify such conversion.
Officials said the inflated turnover declared in GST returns was largely due to fake billing, facilitating fraudulent ITC accumulation and refund claims under zero-rated supplies without payment of tax.
Authorities added that the exports were largely fictitious or grossly exaggerated. E-way bills were generated using doubtful or repeated vehicle numbers, and transport documents were fabricated to support transactions on paper.
Financial trail analysis indicated negligible or circular fund movements despite large-value transactions.
Payments were routed through related entities or withdrawn in cash shortly thereafter, with no corresponding pattern of genuine supplier payments or logistics expenses.
Multiple firms were found to share common contact numbers, IP addresses, and accounting personnel, indicating centralised control.
Officials further stated that Chugh misrepresented and inflated the turnover of his export business to siphon off approximately Rs 11 crore from Yes Bank.
He has also been charge-sheeted by the Central Bureau of Investigation (CBI) in another case involving fraudulent availing of credit facilities through forged documents.
Separately, the Securities and Exchange Board of India (SEBI) issued an order dated March 30 against Vipin Sharma, managing director of Elitecon, for inflating the company’s valuation through fake turnover generated by bogus billing linked to the GST fraud.
The investigation is ongoing.
(IANS)
