ED raids nine locations in Rs 9.63 cr bogus ITC case

On Monday, the Enforcement Directorate (ED) carried out a series of synchronised searches at several locations in Uttar Pradesh and Haryana as part of an inquiry into a major Goods and Services Tax (GST) fraud involving the false claim of input tax credit. The officials stated that teams from the central agency seized nine premises in Muzaffarnagar and Ghaziabad in Uttar Pradesh, as well as further sites in Faridabad, Haryana.

The searches were conducted under the Prevention of Money Laundering Act and focused on alleged irregularities involving Jambudwip Exports and Imports. Investigators say the company is accused of creating and using fake input tax credits through forged invoices and e-way bills. These documents were reportedly generated without any actual movement of goods, allowing the company and its partners to claim tax benefits illegally.

GST authorities earlier estimated the fraudulent input tax credit at Rs 9.63 crore, which officials say is a direct loss to the Government. The Enforcement Directorate began its investigation after the tax department’s findings, turning the GST offence into a money-laundering case. The company is accused of engaging in circular transactions, moving funds through layers, and making repeated cash withdrawals through fake or non-existent companies. Investigators say these tactics are often used to hide the source of illegal money and bring it into the formal economy.

The searches aimed to track the flow of money, find more people involved in the alleged fraud, and collect both paper and digital evidence to understand the full extent of the fake input tax credit network. Officials said the operation could lead to more information about other companies or individuals who may have been part of or benefited from the scheme.

Despite several attempts, we were unable to get a reply from Jambudwip Exports and Import. The company did not respond to requests for comment while this report was being filed, and it has not issued any public statement about the ED’s actions. This case highlights ongoing efforts by tax and enforcement agencies to curb input tax credit fraud, a long-standing issue in the GST system. Fake invoices and trading companies have often been used to claim refunds or reduce tax bills without any real business activity.

The ED’s action under the Prevention of Money Laundering (PMLA) Act aims to recover the quantified loss and investigate whether the proceeds were used for further layering or investment. The officials stressed that the raids are part of a wider strategy to dismantle organised networks that exploit flaws in the invoice-matching and e-way bill verification systems.

The digital records collected during the searches will be forensically analysed to trace the transactions and find the final beneficiaries. The investigation is ongoing. The ED is expected to review bank accounts, property records, and communications linked to the company and its associates.

Offences relating to the GST, especially in cases where there is a significant loss of revenue and where sophisticated methods of diverting funds are involved. The authorities say that these measures serve as a deterrent and safeguard the integrity of the tax system.