Karnataka: Rs. 593cr GST fraud racket busted; Mastermind Mohammed Saifulla arrested in Belagavi probe

Bengaluru: In a major crackdown on tax evasion, officials of the Directorate General of GST Intelligence (DGGI), Belagavi Zonal Unit, have uncovered a massive fake Input Tax Credit(ITC) racket involving fraudulent invoices worth ₹593 crore. The investigation has exposed a sophisticated network of shell companies operating across multiple states, with the alleged mastermind now arrested.

According to officials, the probe began with scrutiny of suspicious GST registrations flagged during routine intelligence analysis. Investigators soon traced irregularities to a Bengaluru-based firm, Star Tax Consultant, which was allegedly playing a central role in orchestrating fraudulent GST transactions.

Search operations conducted at premises linked to the firm revealed a well-organised syndicate involved in issuing fake invoices without any actual supply of goods or services. Authorities found that the network had facilitated fraudulent ITC claims and transfers worth approximately ₹235 crore, enabling beneficiary companies to unlawfully reduce their tax liabilities and evade government revenue.

Officials stated that multiple GST registrations had been created solely for generating fake invoices and e-way bills. These shell entities existed only on paper and had no genuine business operations. The fraudulent invoices were used by beneficiary firms to claim ITC benefits under the GST system, causing significant financial loss to the exchequer.

Investigators also uncovered the use of advanced online accounting software to create and manage fictitious transactions. The accused allegedly used digital tools to systematically generate invoices, maintain fake transaction records and monitor financial flows between shell companies. This allowed the syndicate to maintain the appearance of legitimate business activity while conducting large-scale tax fraud.

Further investigation identified Mohammed Saifulla, a registered GST practitioner based in Bengaluru, as the mastermind behind the racket. He is accused of managing multiple fake GST Identification Numbers (GSTINs) and coordinating the issuance of fraudulent invoices and e-way bills in exchange for commissions calculated on invoice values.

Officials said Saifulla played a key role in facilitating fraudulent ITC claims by connecting shell companies with beneficiary firms. His involvement enabled businesses to illegally claim tax credits without actual transactions, thereby undermining the integrity of the GST system.

Based on substantial documentary and digital evidence collected during the probe, Saifulla was arrested in Bengaluru under Section 69 of the Central Goods and Services Tax (CGST) Act, 2017. He was initially produced before the Special Court for Economic Offences in Bengaluru, which granted transit remand for his transfer to Belagavi.

Subsequently, he was presented before the JMFC-IV court in Belagavi, which remanded him to judicial custody. Authorities said further investigation is underway to identify additional shell entities, beneficiaries, and accomplices involved in the fraud network.

Officials noted that GST fraud through fake ITC claims has emerged as a serious economic threat, with organised syndicates exploiting digital systems and regulatory loopholes. The DGGI has intensified surveillance and enforcement measures to detect such fraudulent activities and protect government revenue. Authorities have also cautioned businesses against engaging in suspicious GST transactions and warned that strict legal action will be taken against individuals and firms involved in tax evasion schemes.

The crackdown is considered one of the largest GST fraud detections in Karnataka in recent months, highlighting the growing efforts of tax enforcement agencies to dismantle organised financial crime networks.