DGGI arrests mastermind of Rs 1,825 crore GST refund fraud at Delhi airport

Chugh ignored as many as 22 summons issued by the DGGI’s Ahmedabad unit, the statement read. He fled to Dubai after committing the GST refund fraud, which spanned multiple jurisdictions and involved fraudulent Input Tax Credit (ITC) claims on zero-rated supplies.

What did the investigation reveal?

The investigation revealed that Chugh, along with his close associate Vipin Sharma, devised a network of dummy firms to illegally avail and encash ITC. The entities were registered using borrowed or fake KYC documents. These shell companies lacked any genuine business infrastructure, manpower, or operational activity at their declared addresses.

Dummy proprietors and directors served merely as name-lenders, receiving fixed monthly cash payments, while all key operations—including GST registrations, invoice generation, banking, return filings, and refund claims—were centrally controlled by the accused.

The modus operandi involved generating fake purchase invoices, primarily for high-value tobacco products like Kimam and Jarda, without any actual supply of goods. These invoices were circulated through multiple intermediary firms to create an artificial trail of trading activity, allowing ineligible ITC to enter the GST system.

The accumulated credit was then concentrated in entities projected as exporters, especially those operating from the Kandla Special Economic Zone (KASEZ). Parallel to the paper transactions, the group procured low-value or inferior tobacco products locally, often without invoices, and misdeclared them as premium items for export at highly inflated values.

Exports were shown under Letters of Undertaking (LUT) without payment of tax, enabling fraudulent refund claims on the accumulated ITC. Investigations revealed that many exports were either fictitious or grossly exaggerated, supported by fabricated e-way bills, repeated vehicle numbers, and fake transportation documents.

Financial analysis showed negligible genuine fund movement and also revealed that payments received were routed through related entities or withdrawn. Multiple firms shared common contact numbers, IP addresses, and accounting personnel, pointing to centralized control by Chugh and his associates.

Chugh is also wanted in other economic offences. He allegedly misrepresented his export business turnover to siphon off around Rs 11 crore from Yes Bank and has been charge-sheeted by the CBI in a separate case involving forged documents for credit facilities.

His associate Vipin Sharma, Managing Director of M/s Elitecon, faces SEBI action for inflating company valuation through bogus billing linked to similar GST frauds. SEBI issued an interim order against Sharma on March 30.