A massive Goods and Services Tax (GST) fraud, allegedly originating in Chittoor district, has come under intense scrutiny with preliminary investigations reportedly unearthing the systematic misuse of the credentials of petty shoppers and daily-wage earners to create fake Input Tax Credit (ITC) claims worth more than ₹100 crore.
Officials maintain that the total inter-State transactions linked to the fraudulent network may be 10 times the figure.
Victim’s dilemma
The scam surfaced after a former worker of a wine shop in Chittoor, G. Vijaya Chakravarthi, of Amman Koil Street, approached Superintendent of Police Tushar Dudi on December 29, 2025, alleging that his documents such as Aadhaar, PAN and others had been misused and his credentials forged allegedly by his former employer, Shaik Rizwan, a scrap merchant in Chittoor.
In his complaint, Mr. Chakravarthi said he had received two GST notices for ₹92,082 and ₹41.8 lakh in August. He told the police that he hardly earns a few hundred rupees a day and had no knowledge of running any business.
“I was in a dilemma for three months. I realised that I was a victim of my former employer after finding his mobile numbers on the GST documents, though the shell company had been registered in my name,” he said.
Incidentally, the GST officials detected multiple shell companies registered in the names of economically vulnerable individuals across Chittoor.
“In the last two months, we have issued notices to five persons in Chittoor, and the number may go up to one hundred soon,” Assistant Commercial Tax Officer (ACTO) under the Sri City SEZ purview, Praveen Kumar, said, adding that he had recently received a complaint from a lorry driver, carrying iron scrap to a factory near Gudur, after an alleged interception and attack by members of the network operated by a Chittoor-based merchant.
Modus operandi
Mr. Kumar said the network involved in GST frauds collected Aadhaar cards, PAN details, and photographs from gullible public by offering small payments ranging from ₹5,000 to ₹10,000. Using fake mobile numbers, forged email IDs, and unauthorised access to DigiLocker accounts, the group allegedly obtained GST registrations, opened bank accounts, and generated bogus invoices to claim ITC.
“In most cases, the network obtains fake bills for scrap material purchase from Pernambat in Tamil Nadu, which would be later processed at various levels to claim the ITC,” he said.
While the network spread across Andhra Pradesh, Telangana and Karnataka, the GST officials identified Chittoor as the starting point for company registrations and identity procurement.
Records indicate that invoices were generated through entities based in Hyderabad, while large financial transactions were routed through Bengaluru-linked accounts to mask the movement of funds.
Officials estimate that around 450 individuals in Chittoor district might have been affected. Many victims reportedly remain unaware that companies with high turnovers were shown in their names.
Investigators pointed to serious deficiencies in banking KYC verification and GST registration checks, which allowed the fraud to continue undetected for years.
Responding to the issue, Mr. Tushar Dudi said a probe into the GST fraud was a multi-department task. “We are getting complaints from the public, and this will be investigated,” the SP said.
A couple of teams from the State and Central GST offices were said to have been deployed to examine the bank statements, call data records, IP logs, and DigiLocker access trails. Officials involved in the probe said more than 50 individuals, including registration brokers, finance agents, digital service centre staff and shell company operators, could be directly or indirectly linked to the racket.
