ED Conducts Multi-State Searches in Rs. 100 Crore Fake ITC Fraud Case

Background

The Directorate of Enforcement (ED), Itanagar Zonal Office, conducted search operations on January 20, 2026, at 10 premises across West Bengal, Manipur and Jharkhand under the Prevention of Money Laundering Act, 2002 (PMLA) in connection with a Rs. 100-crore fake Input Tax Credit (ITC) fraud. The investigation was initiated on the basis of an FIR registered under various provisions of the Indian Penal Code, 1860, following a complaint dated October 3, 2024, by the CGST & Central Excise Commissionerate, Itanagar, against M/s Sidhi Vinayak Trade Merchant, Arunachal Pradesh, which was found to be non-existent at its declared address. ED’s probe revealed that the firm fraudulently issued 15,258 bogus invoices with a taxable value of approximately Rs. 658.55 crore within six months, facilitating wrongful availment of fake ITC worth Rs. 99.31 crore by 58 recipient entities across 11 States during FY 2023–24.

Searches further uncovered that entities such as Dayal Commercial, Apee Enterprises, Phoenix Hydraulics, Ram Awatar Bansal & Co., and Bhima Shankar Industries, operating from Kolkata, were engaged solely in generating bogus bills and passing on ITC. These entities allegedly issued fake invoices worth Rs. 450 crore, fabricated vehicle and sales records, generated fake e-way bills, and fraudulently claimed GST refunds.

In Manipur and Jharkhand, entities were found to have declared fictitious business operations and admitted to availing fake ITC without supporting documents. The searches resulted in freezing of bank accounts, seizure of property documents, recovery of incriminating records, and freezing of Rs. 21 lakh from accounts of M/s S.K. Construction.