A routine check of a suspicious GST registration has led to the exposure of a massive tax fraud in Karnataka. Officials from the Directorate General of GST Intelligence, through its Belagavi zonal unit, said they uncovered a fake input tax credit network worth about ₹593 crore. Searches were carried out at premises linked to Star Tax Consultant in Bengaluru. Investigators said the operation involved issuing invoices without any actual supply of goods or services, enabling wrongful input tax credit claims of nearly ₹235 crore.
At the centre of the case is Mohammad Saifullah, a registered GST practitioner, identified as the alleged mastermind. Preliminary findings suggest that multiple GST registrations were created only to generate bogus invoices and e-way bills. Though formally valid, these GST Identification Numbers were allegedly linked to shell entities with no real business activity. Officials said Saifullah managed several non-existent and shell GSTINs and issued fake invoices and e-way bills in return for a commission calculated as a % of the invoice value.
According to officials, online accounting software was used to record and monitor transactions across these entities. This created the appearance of genuine trade while helping beneficiaries claim fraudulent input tax credits. Under India’s GST system, businesses can claim credit for taxes paid on inputs. By fabricating invoices without actual supply, the network allegedly helped recipients illegally reduce their tax liabilities.
Saifullah was arrested on February 24 in Bengaluru under Section 69 of the Central Goods and Services Tax Act, 2017. Officials said he admitted his role when confronted with evidence. He was produced before a special court for economic offenses in Bengaluru, which granted transit remand for his transfer to Belagavi. He was later presented before the Judicial Magistrate First Class-4 court in Belagavi and remanded to judicial custody. Authorities said the investigation is ongoing to identify more beneficiaries and determine the full scale of the fraud. The number of entities under scrutiny and the possibility of further arrests have not been disclosed.
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