DGGI cracks ₹177 Cr GST fraud network, 2 held in multi-state ITC scam

In a major crackdown on organised GST evasion, the Directorate General of Goods and Services Tax Intelligence (DGGI) has arrested two individuals linked to a ₹177-crore fake Input Tax Credit (ITC) racket , officials said on Wednesday.

The arrests were made by the Visakhapatnam Zonal Unit in Hyderabad following specific intelligence developed through data analytics and inter-agency coordination , targeting an inter-state fraud network. The accused Siddagone Prabhaker and Ramavath Nagaraju Naik allegedly operated 66 shell proprietorship firms as part of an organised GST evasion syndicate, in violation of the Central Goods and Services Tax Act, 2017.

According to officials, these shell firms existed largely on paper and were used to generate fake invoices without actual supply of goods or services . This enabled fraudulent availing and passing of input tax credit , allowing beneficiaries to illegally reduce their tax liabilities , causing significant losses to the exchequer.

Authorities said such rackets typically operate across multiple states, using layers of entities to obscure transaction trails. The case was detected through data-driven intelligence and coordinated enforcement efforts , highlighting the growing use of technology in tracking financial fraud.

Another alleged mastermind, Aadi Reddy alias Anji Reddy , is currently absconding , and efforts are underway to trace him.

Fake ITC fraud remains one of the most prevalent forms of GST evasion , where fraudsters create dummy firms to circulate bogus invoices and claim undue tax credits. The DGGI said the latest action is part of a broader effort to dismantle organised fraud networks and maintain sustained pressure on tax evasion syndicates. Further investigations are ongoing , with more arrests likely.