Karnataka busts Rs 1,464-crore interstate fake invoicing racket

Mangalore Today News Network

Bengaluru, January 5, 2026: Karnataka’s Commercial Taxes Department has uncovered a ₹1,464-crore fake invoicing racket operating across south India, officials said on Sunday.

The fraud, detected by the Enforcement Wing (South Zone), involved the creation of bogus inward and outward supply transactions worth ₹1,464 crore using forged and fabricated documents. The transactions were linked to commodities such as cement, iron, steel and other construction materials.

According to the department, the racket led to the wrongful availing and transfer of Input Tax Credit (ITC) amounting to about ₹355 crore, without any actual movement of goods.

Acting on human intelligence and sustained monitoring of tax filings and financial trails, officials conducted coordinated search and seizure operations in Bengaluru, Chennai, Vellore and Pernampattu. During the raids, authorities seized 24 mobile phones, 51 SIM cards, two pen drives, bank statements and several rubber stamps belonging to different business entities.

Two brothers from Tamil Nadu — Irbaz Ahmed and Nafiz Ahmed — were apprehended in Pernampattu. They had allegedly floated fake firms including Trion Traders, Wonder Traders, Royal Traders and Galaxy Enterprises. In Bengaluru, officials arrested Eddala Pratap and Revati, accused of creating shell entities such as Power Steel and Cement, PR Construction, SV Traders and SRS Cement Steel Traders. All four have been remanded to 14 days’ judicial custody by the Special Court for Economic Offences, Bengaluru.

The investigation revealed that multiple GST registrations were fraudulently obtained using forged documents, including stamp papers sourced online, fabricated rental agreements, fake signatures of landlords and tenants, false tax-paid receipts and forged notarial attestations.

“These registrations were used to build layers of shell entities to issue and circulate fake invoices while giving the appearance of legitimate business activity,” the department said. After availing and passing on large amounts of ITC, the entities allegedly cancelled their GST registrations to evade audits and scrutiny — a tactic the department described as an emerging modus operandi.

The department said the case was detected using advanced GST analytics. Its in-house Non-Genuine Taxpayer (NGTP) module, along with IP address tracking from the GST back office, flagged abnormal invoicing patterns and circular ITC flows, leading to coordinated enforcement action across multiple locations.