CHANDIGARH/LUDHIANA, JULY 2: A massive input tax credit (ITC) scam involving bogus firms and fake invoices has come to light in Ludhiana, where authorities say an absconding accountant engineered a network of shell companies to siphon off over ₹150 crore in fraudulent GST claims.
According to officials, Sarabjit Singh, the key accused in the scam, operated a network of 20 fictitious firms set up in the names of daily-wage labourers and unemployed youth, who were lured with the promise of ₹800 a day. Over a span of three years, the bogus entities recorded fraudulent transactions worth ₹866.67 crore and claimed input tax credits totaling ₹157.22 crore, without any real commercial activity.
“These firms existed only on paper. There were no physical operations, no goods movement—only fabricated invoices and financial statements,” said a senior taxation officer involved in the investigation. “Singh exploited vulnerable individuals, many of whom earned barely ₹500 a day, to gain access to their Aadhaar and bank details, which were then used to register GST accounts and set up shell companies.”
The scam began in 2023 and continued undetected until recently. Investigators from the State Intelligence and Preventive Unit (SIPU) broke the case open, leading to an FIR in Ludhiana. Singh, the alleged mastermind, remains at large, but two of his associates have been taken into custody.
Between 2023 and the present, Singh and his team reportedly claimed ₹45.12 crore in ITC during the 2023–24 fiscal year through fake transactions amounting to ₹249 crore. The following year, the claims rose to ₹104.08 crore based on ₹569.54 crore in bogus billing. In just the first two months of this fiscal year, an additional ₹8.01 crore was claimed from transactions valued at ₹47.25 crore.
Punjab Finance Minister Harpal Singh Cheema confirmed the findings and revealed that “critical evidence” had been seized during raids. “We have recovered ₹40 lakh in cash, unsigned cheque books, pre-stamped NEFT forms and fake invoice books,” he said. “Our investigations are focused on unearthing the trail of ITC claims, e-way bills and identifying more beneficiary firms. SIPU is being further strengthened to prevent future scams of this scale.”
In a related crackdown, the Department of Taxation also exposed fraudulent activity by Maa Durga Roadlines, a Ludhiana-based transport company. The firm allegedly generated bogus e-way bills and enabled unaccounted goods movement worth ₹168 crore. Officials said the e-way bills were created using credentials of Ludhiana-registered firms, falsely indicating movement of goods from Delhi to Ludhiana, despite no vehicles actually entering Punjab.
“The goods were never transported—there was no logistical movement—but massive ITC claims were made using these fake documents,” Cheema said. The company is suspected of manipulating transactions involving high-value items such as copper, tobacco and scrap metal to fraudulently claim ₹30.66 crore in tax credit.
Authorities say both cases underline the need for closer monitoring of GST systems and stricter enforcement. As investigations continue, efforts are underway to track down Sarabjit Singh and dismantle the wider network that enabled the multi-crore fraud.
