DGGI Ahmedabad Unit Arrests Mastermind Of Major GST Refund Fraud

22 Apr 2026 CW Team

Investigation found that Chugh and an associate, Vipin Sharma, structured a network of dummy firms and name lenders to generate fraudulent input tax credit and claim refunds on zero-rated supplies. Entities were established using borrowed KYC documents and lacked infrastructure, manpower and genuine business activity at declared addresses. Operational tasks including registration, invoice generation, banking operations, return filing and refund submission were centrally controlled.

Fraudulent input tax credit was created through fake purchase invoices showing high-value tobacco products and routed through multiple intermediary firms to layer transactions. Low-value tobacco and inferior smoking mixtures were procured locally without invoices, misdeclared as higher-value products and exported at inflated values from Kandla Special Economic Zone (KASEZ). Exports were shown under letter of undertaking without payment of tax and were largely fictitious or grossly exaggerated according to investigators.

Financial analysis revealed negligible genuine fund movement, circular payments and cash withdrawals shortly after receipts, with multiple firms sharing contact numbers, internet protocol addresses and accounting personnel indicative of centralised control. E-way bills and transportation documents were fabricated or reused to support the paper trail. The scheme also involved siphoning of funds, including an alleged diversion of Rs 110 mn from Yes Bank.

Chugh has been charge-sheeted by the Central Bureau of Investigation in another matter and Sharma has faced action from the Securities and Exchange Board of India for inflating company valuation through bogus billing linked to the GST scheme. The DGGI unit said further legal proceedings will follow.

DGGI Ahmedabad Zonal Unit arrested Kapil Chugh on 19 April 2026 at IGI Delhi airport as he returned from Dubai. He was wanted in multiple economic criminal cases and had evaded investigation, failing to respond to 22 summons issued by the unit. The probe identifies him as the mastermind of a large-scale goods and services tax refund fraud amounting to Rs 18.25 bn. Investigation found that Chugh and an associate, Vipin Sharma, structured a network of dummy firms and name lenders to generate fraudulent input tax credit and claim refunds on zero-rated supplies. Entities were established using borrowed KYC documents and lacked infrastructure, manpower and genuine business activity at declared addresses. Operational tasks including registration, invoice generation, banking operations, return filing and refund submission were centrally controlled. Fraudulent input tax credit was created through fake purchase invoices showing high-value tobacco products and routed through multiple intermediary firms to layer transactions. Low-value tobacco and inferior smoking mixtures were procured locally without invoices, misdeclared as higher-value products and exported at inflated values from Kandla Special Economic Zone (KASEZ). Exports were shown under letter of undertaking without payment of tax and were largely fictitious or grossly exaggerated according to investigators. Financial analysis revealed negligible genuine fund movement, circular payments and cash withdrawals shortly after receipts, with multiple firms sharing contact numbers, internet protocol addresses and accounting personnel indicative of centralised control. E-way bills and transportation documents were fabricated or reused to support the paper trail. The scheme also involved siphoning of funds, including an alleged diversion of Rs 110 mn from Yes Bank. Chugh has been charge-sheeted by the Central Bureau of Investigation in another matter and Sharma has faced action from the Securities and Exchange Board of India for inflating company valuation through bogus billing linked to the GST scheme. The DGGI unit said further legal proceedings will follow.

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