DGGI Ahmedabad Arrests ₹1,825 Crore GST Refund Fraud Mastermind from Delhi Airport

Ahmedabad: Officials of the Directorate General of GST Intelligence (DGGI), Ahmedabad Zonal Unit, have arrested the alleged mastermind behind one of the largest GST refund frauds, involving approximately ₹1,825 crore, at IGI Airport in Delhi. The accused, Kapil Chugh, was apprehended on April 19 upon his arrival from Dubai. He had been evading investigation and failed to respond to as many as 22 summons issued by DGGI Ahmedabad. Authorities said he had fled to Dubai after orchestrating the large-scale fraud across multiple jurisdictions.

According to investigators, Chugh, along with associate Vipin Sharma, engineered a complex network of shell entities to fraudulently avail Input Tax Credit (ITC) and encash it through refund claims on zero-rated exports. The operation relied on dummy firms created using borrowed KYC documents, with no real business activity, infrastructure, or workforce. These entities were controlled centrally, while listed proprietors acted as name lenders in exchange for fixed payments.

The probe revealed that fake purchase invoices, primarily involving high-value tobacco products—were generated without actual movement of goods to create artificial ITC. These invoices were routed through multiple intermediary firms, forming layered transactions that enabled the accumulation and transfer of ineligible tax credit within the GST system.

Investigators further found that low-value tobacco products and inferior smoking mixtures were procured locally, often without invoices, and falsely declared as premium products such as kimam or jarda for export. These goods were shown at inflated values, despite the absence of any manufacturing infrastructure to justify such conversions. The entities then claimed refunds under zero-rated supplies using Letters of Undertaking (LUT) without paying tax.

Authorities noted that many of the exports were either fictitious or grossly exaggerated. E-way bills were generated using questionable or repeated vehicle numbers, while transport documents were fabricated to support the transactions.

Financial analysis indicated minimal genuine fund movement, with transactions often circular in nature. Funds were routed through related entities or withdrawn in cash shortly after receipt, with no corresponding commercial expenses such as logistics or supplier payments. Multiple firms involved in the network shared common contact details, IP addresses, and accounting personnel, pointing to centralized control.

Further investigation revealed that Chugh allegedly siphoned off around ₹11 crore from Yes Bank by inflating the turnover of his export business. He has also been charge-sheeted by the Central Bureau of Investigation (CBI) in a separate case related to fraudulent credit facilities obtained using forged documents.

In a related development, the Securities and Exchange Board of India (SEBI), in an order dated March 30, 2026, took action against Vipin Sharma, Managing Director of M/s Elitecon, for allegedly inflating company valuation through bogus billing linked to GST fraud.

Officials said further investigation is underway to trace the full extent of the fraud and identify other beneficiaries and accomplices involved in the network. DeshGujarat