Massive Fake GST Firm Scam Unearthed in Pune Exposing a Rs 8,000 Crore Fraud

A shocking case of fraud has come to light in Pune, where authorities uncovered a massive scam involving numerous fake GST firms linked to a company falsely registered in the name of an auto driver. This case, led by the Directorate of GST Intelligence (DGGI), reveals a financial scam estimated to be between Rs 5,000 and Rs 8,000 crore, drawing widespread public attention and legal scrutiny.

The primary suspect, Ashrafbhai Ibrahimbhai Kalavadiya, a 50-year-old from Surat, Gujarat, is believed to be the mastermind behind this extensive operation. According to the investigation, Kalavadiya allegedly established 246 fraudulent GST companies to carry out the tax scam. Alongside him, others including Nitin Barge, Faizal Mevalal, and Nizamuddin Khan have been implicated in managing different parts of this elaborate network.

The DGGI’s investigation began in October 2023 when officials identified suspicious online transactions linked to “Pathan Enterprises,” supposedly based in Pune. During the probe, officers found that Pathan Enterprises did not exist at the claimed address on the Pune-Solapur highway, nor in any legitimate business records. The registered proprietor, Pathan Shabbir Khan Anwar Khan, was tracked down in Bhavnagar, Gujarat, and was discovered to be an unsuspecting auto driver entirely unaware of the business registered under his name.

As the investigation continued, the DGGI team uncovered that Kalavadiya had employed various tactics, including using false identities, KYC documents, and dummy accounts. A bank account in Rajkot, under the name Jeet Kukadiya, was traced to one of the fraudulent firms; however, Kukadiya, a private security guard, clarified that he had opened this account for other individuals and had no direct involvement in the scam.

The investigation also revealed that Kalavadiya had employed a network of associates who assisted in setting up and managing these fake firms. Each accomplice played a specific role: Barge reportedly handled financial transactions, Mevalal managed cash movements, and Khan supplied fake SIM cards and bank accounts through unauthorized KYC processes. Another associate, Amit Singh, allegedly assisted in setting up these fake firms, while Rahul Bariyya facilitated the sale of these firms to other parties, adding further complexity to the fraud.

To dismantle this extensive network, DGGI teams conducted a series of raids across Pune, Mumbai, Rajkot, and Bhavnagar, leading to the arrest of Kalavadiya on March 12, 2024, from a hotel in Mira Bhayandar, Mumbai. The search operations led to the seizure of substantial evidence, including 21 mobile phones, 11 SIM cards, multiple bank debit cards, and rubber stamps, all linked to different fake GST firms.

Following his arrest, Kalavadiya was charged under various sections of the Goods and Services Tax Act, and he is currently in judicial custody. The DGGI alleges that Kalavadiya operated his firms without conducting any real business, generating fake GST invoices solely to evade taxes and defraud the government.

Authorities estimate that through his 246 fake GST firms, Kalavadiya managed to evade over Rs 20.75 crores under the guise of Pathan Enterprises alone. Overall, the fraudulent firms are believed to have caused losses amounting to thousands of crores in unpaid taxes from September 2018 to March 2024. Local law enforcement has confirmed an ongoing investigation, with Deputy Commissioner of Police Smartana Patil emphasizing the case's gravity.

Notably, Kalavadiya has a history of similar offenses, with past allegations involving a fake GST billing racket in Gujarat. The recent findings underscore the need for enhanced vigilance against tax fraud, as these fraudulent operations not only cost the government billions but also tarnish the reputation of legitimate businesses.

As authorities continue their probe, this case serves as a stark reminder of the vulnerabilities in tax systems and the lengths to which fraudsters may go to exploit them.