Kanpur police have uncovered a large-scale GST fraud in which accused individuals used the identities of economically weaker citizens to create fake firms and route transactions worth Rs 250 crore, according to officials. Two people have been arrested, and five others are still at large. The scheme is part of a wider inter-state tax evasion network, with investigations ongoing to trace remaining members and recover funds.

Exploiting Vulnerable Individuals

The accused allegedly targeted e-rickshaw drivers, students, and daily wage earners by offering them easy loan opportunities. In exchange for PAN, Aadhaar, and signed documents, the fraudsters registered shell companies, obtained GST numbers, and opened bank accounts to commit Input Tax Credit (ITC) fraud. A resident of Kanpur’s Nazirabad area, Anurag Verma, reported that documents he submitted for a loan for his sister’s wedding were being misused. A probe by the Cyber Cell revealed a company had been registered in his name without his knowledge.

Technical investigations involving bank account analysis, call detail records, and digital tracking exposed a structured network operating multiple shell companies using stolen identities. In one case, police traced transactions worth Rs 117 crore to a bank account opened in the name of Ujjawal Gupta, son of an e-rickshaw driver from Unnao district. The family had submitted documents for a medical loan and were unaware that a firm and bank account were operating in their name.

Operational Structure and Fraud Tactics

Many victims were students, daily wage earners, and private employees who were completely unaware that companies existed in their names. The accused registered shell firms using forged rent agreements and utility documents. These firms existed only on paper and issued fake invoices without any actual supply of goods or services. Fake e-way bills were generated, and invoices were circulated among interconnected firms to inflate turnover and claim fraudulent ITC benefits.

The illegally obtained tax credit was then used to reduce tax liabilities or obtain GST refunds, with funds routed through multiple accounts to project them as legitimate. During raids, police recovered 30 mobile phones, fake SIM cards, 52 keys, signboards of firms, cheque books, ATM cards, registration documents, digital devices, and vehicles, indicating the operation of numerous bogus firms from limited premises.

Financial Impact and Next Steps

Authorities have frozen around Rs 1.5 crore lying in bank accounts linked to three fake firms. So far, 38 fraudulent companies have been identified, and further financial scrutiny is underway. Police are coordinating with GST authorities and banks to take action against tax evasion and financial fraud. Cases have been registered under charges of cheating, forgery, and other relevant provisions of law, and efforts are on to trace the remaining members of the racket.

Police Commissioner Raghubir Lal said the investigation is ongoing, with more disclosures expected as it progresses. The fraud highlights the risks of identity theft and misuse in the digital economy, particularly for vulnerable populations. The case also highlights the need for stricter verification processes in financial and tax-related systems to prevent such large-scale fraud.