New Delhi, April 20, 2026: In a major crackdown on financial fraud, officials of the Directorate General of GST Intelligence (DGGI), Ahmedabad Zonal Unit, have arrested the alleged mastermind behind a ₹1,825 crore GST refund scam at Indira Gandhi International Airport.
The आरोपी, identified as Kapil Chugh, was detained on April 19 upon arrival from Dubai. He had been evading investigation despite 22 summons issued by DGGI.
Modus Operandi: Fake Firms, Bogus Invoices, and ITC Fraud
Investigations reveal that Chugh, along with associate Vipin Sharma, orchestrated a sophisticated network to fraudulently claim Input Tax Credit (ITC) and convert it into cash through fake export refund claims.
Key elements of the scam included:
- Creation of dummy firms using third-party KYC documents
- No real business activity, infrastructure, or workforce at registered addresses
- Use of fake invoices without actual supply of goods
- Routing transactions through multiple intermediary entities to create a complex paper trail
The entire operation—GST registrations, invoicing, banking, return filings, and refund claims—was reportedly controlled from a single location.
Fake Tobacco Exports Used to Inflate Claims
To generate large ITC amounts, the accused:
- Showed trade in high-value tobacco products on paper
- Purchased low-quality tobacco locally without invoices
- Falsely exported it as premium products like kimam and zarda at inflated prices
Authorities found no evidence of manufacturing units or machinery to support such exports.
SEZ Link and Fraudulent Export Claims
The investigation found that:
- ITC was routed and accumulated in select firms shown as exporters
- Many of these entities were linked to Kandla Special Economic Zone
- Exports were conducted under Letter of Undertaking (LUT) without tax payment, enabling fraudulent refund claims
Additionally, fake e-way bills and fabricated transport documents were used to simulate genuine trade.
Financial Trail Raises Red Flags
Despite transactions worth crores:
- Funds circulated within a limited set of bank accounts
- Money was quickly transferred or withdrawn in cash
- No genuine expenses such as supplier payments or logistics costs were identified
Investigators also found common phone numbers, IP addresses, and accountants across multiple firms, confirming centralized control of the racket.
