Bengaluru: Karnataka’s Commercial Taxes Department has dismantled a large interstate GST fake invoicing racket involving transactions worth ₹1,464 crore, arresting four key accused in a coordinated enforcement operation across Karnataka and Tamil Nadu.

The Enforcement Wing (South Zone) uncovered a sophisticated carousel fraud in which bogus firms issued fake invoices for building materials such as cement, iron and steel, enabling the illegal claiming and circulation of Input Tax Credit (ITC) worth about ₹355 crore without any physical movement of goods on Sunday.

The case was cracked using advanced GST analytics, including the department’s Non-Genuine Taxpayer (NGTP) module and IP address tracking from the GST back office. The data revealed circular invoicing patterns and abnormal ITC flows among linked entities, triggering targeted searches and seizures.

Investigations showed the accused had obtained multiple GST registrations using forged documents, including online-purchased stamp papers, fake lease deeds, falsified signatures, fabricated tax receipts and counterfeit notarial stamps. These registrations were used to create layers of shell companies that generated fake invoices to pass on illicit ITC.

After siphoning off substantial credits, several entities voluntarily cancelled their GST registrations to evade audits and erase digital trails, officials said, calling it an emerging modus operandi that has prompted the department to consider tighter safeguards.

Simultaneous raids were conducted in Bengaluru, Chennai, Vellore and Pernampattu, resulting in the seizure of 24 mobile phones, 51 SIM cards, two pen drives, bank statements and multiple rubber stamps linked to the fake firms.

In a significant example of interstate coordination, four alleged masterminds were arrested with assistance from Tamil Nadu Commercial Tax authorities. Brothers Irbaz Ahmed and Nafiz Ahmed of Tamil Nadu, linked to bogus firms including Trion Traders, Wonder Traders, Royal Traders and Galaxy Enterprises, were arrested in Pernampattu.

In Bengaluru, Eddala Pratap and his associate Revati, connected to shell entities such as Power Steel and Cement, P R Construction, S V Traders and S R S Cement Steel Traders, were also taken into custody.

All four were produced before the Special Court for Economic Offences in Bengaluru and remanded to 14 days of judicial custody, officials said.

IANS