ED arrests two in Rs 734 crore GST fraud case involving 135 shell firms

The ED has arrested two individuals, Gyaan Chand Jaiswal and Raaj Jaiswal, in connection with a massive GST Input Tax Credit fraud. A syndicate allegedly used 135 shell firms to pass on fake ITC worth over Rs 734 crore via bogus invoices.

The Enforcement Directorate (ED) has arrested two persons in connection with an investigation into a GST Input Tax Credit (ITC) fraud case. ED investigation in the case was initiated based on multiple complaints filed by the Directorate General of GST Intelligence (DGGI), Jamshedpur (Jharkhand), which had unearthed a sophisticated fraud involving the generation and passing on of fake ITC.

Rs 734 Crore Fraud Uncovered

In a statement, the federal agency said the investigation revealed that the syndicate had created a web of 135 shell companies which existed only on paper and were used to issue bogus invoices worth over Rs 5,000 crore without any actual supply of goods or services. "Through this modus operandi, the syndicate fraudulently generated and passed on fake ITC to the tune of over Rs 734 crore. This illicitly generated credit was then sold at a commission to various beneficiary firms, which used it to evade their own GST liabilities," the ED said.

Arrests and Legal Action

The two accused arrested by ED's Ranchi Zonal Office have been identified as Gyaan Chand Jaiswal alias Babloo Jaiswal and Raaj Jaiswal. They were held following a search and seizure operation conducted on September 30 under Section 19 of the Prevention of Money Laundering Act, 2002, and subsequently produced before a Special PMLA Court, Ranchi, on October 1, which remanded them to judicial custody.

On September 30, the agency searched four premises related to the residential and office premises of Gyaan Chand Jaiswal and Sanjay Parekh (CA) and others in Jamshedpur, Jharkhand and Kolkata in West Bengal. During the search proceedings, various incriminating documents and digital devices were found and seized under appropriate provisions of PMLA.

Investigation Reveals Key Beneficiaries

ED investigation revealed that the group led by Gyaan Chand Jaiswal and Raaj Jaiswal were one of the main beneficiaries of the said fake ITC fraud, through their entities. "They not only incorporated entities in their and family members' names, Maa Sharda Endeavours Pvt Ltd, Makers Casting Pvt Ltd and Kedarnath Trexim Pvt Ltd, but also in the name of their employees, such as Jai Bhole Enterprises," the agency said.

“The investigation found that fake ITC to the tune of Rs 54.33 crores were routed through the said entities and was layered ultimately into their personal bank accounts as well as the bank accounts of their relatives and entities, which is PoC attributed to them, and the said PoC was suspected to have been utilised towards their business activities and in acquisition of various movable and immovable properties," said the agency.

Previous Actions in the Case

Earlier in this case, search and seizure actions were done in May, 2025 and August, 2025 at various premises related to the accused persons in Kolkata, Jamshedpur, Ranchi and other places and resulted in seizure of various incriminating documents and details, digital devices, seizure of cash and freezing of bank balances to the tune of nearly Rs 70 lakhs. Further, ED has issued two PAOs consisting of properties worth more than 20 crores. Furthermore, four accused persons were also arrested under the PMLA on May 8, 2025, and of the same, three are presently under judicial custody. A prosecution complaint has also been filed before the Special PMLA Court, Ranchi, which is at the trial stage. (ANI)

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