Ludhiana, December 20
The World MSME Forum has demanded from the Union Home Minister Amit Shah for an independent investigation into the alleged 40 lakh crores of GST frauds and the role of central and state GST officials in the matter. In a letter written to Shah, the President of the World MSME Forum Badish Jindal has mentioned, “This is to draw your urgent attention to what appears to be the largest financial scam in the history of independent India, involving the Goods and Services Tax (GST) framework. The GST system was implemented in July 2017 with the promise of transparency, accountability, and complete digitization. However, despite a fully online mechanism for invoice generation, return filing, and tax reconciliation, large-scale GST fraud has continued unchecked across the country. Estimates suggest that GST evasion and fake invoicing amount to nearly ₹7 lakh crore annually, representing approximately 30 per cent of total GST collections.”
Jindal further pointed out in his letter that according to official government disclosures, GST fraud worth ₹7.08 lakh crore has been detected over the past five years. “Experts believe this figure represents only a fraction—approximately 20 per cent of the actual fraud—indicating that the cumulative value of GST scams over the last nine years may exceed ₹40 lakh crore. In spite of these alarming figures, Central and State GST officials have largely been absolved of responsibility, which raises serious concerns about systemic failure and possible administrative complicity”, reads the letter, a copy of which was released to media.
Jindal has also highlighted in his letter that the GST regime mandates that every invoice and transaction be uploaded online, making real-time monitoring possible, while adding, “Therefore, the continuation of fake billing on such a massive scale strongly suggests deliberate negligence or collusion within the GST administration. From 2017 to 2023, the department remained largely silent, and when the issue was raised in Parliament in 2023, only limited and symbolic action was initiated against a few industrialists.”
The letter further reads, “Evidence indicates a recurring modus operandi: shell companies are created, fake invoices worth hundreds of crores are generated and after a short period these entities are shut down. Despite abnormal turnover patterns being clearly visible on the GST portal, no timely investigation is initiated. Subsequently, GST registrations of such entities are retrospectively cancelled, effectively nullifying their tax liability.”
Jindal added that it is widely alleged that GST officials collect 2–3 per cent of the fake invoice value as illegal gratification and later extract additional bribes—sometimes up to 10 per cent of the penalty amount—from purchasing companies before cancelling their registrations retrospectively as well. “Eventually, enforcement pressure is applied selectively on large industrial houses, often involving arrests of family members who have no operational connection with the business. A disturbing example was reported from Mandi Gobindgarh, Punjab, where the Central GST department arrested the son of a company owner despite his lack of involvement. Such actions indicate selective enforcement and open avenues for corruption involving thousands of crores of rupees”, he stated.
The letter also mentioned, “In multiple cases, High Courts have granted relief, clearly holding that buyers cannot be made liable for fraudulent acts committed by sellers. Under GST law, only the department has the authority to verify suppliers and monitor transactions. Ordinary business owners have no legal mechanism to independently verify whether a seller is genuine. Holding buyers responsible in such circumstances is therefore unjust and unethical. There is also growing public concern regarding the disproportionate increase in assets and wealth of several GST officials since the introduction of GST. Despite these red flags, no comprehensive investigation into the conduct, assets, or accountability of departmental officials has been initiated.”
Jindal said that in view of the above-mentioned points, Home Minister should consider his fololowing requests which primarily includes constitution of an independent commission, headed by a retired High Court or Supreme Court judge, to investigate the alleged ₹40 lakh crore GST scam and determine the role of Central and State GST officials. “Re-investigation of all cases where GST registrations were cancelled suo motu or retrospectively, to ascertain whether such actions were used to shield fraudulent entities. A special probe into GST officials who failed to prevent large-scale fake billing within their jurisdictions despite the existence of a fully digitized monitoring system”, demanded Jindal. Asserting that unless strict and exemplary action is taken against corrupt officials within the GST machinery, it will be impossible to stop the annual GST fraud of nearly ₹7 lakh crore, and public confidence in India’s taxation and governance systems will continue to erode, Jindal mentioned in his letter to shah, “I sincerely hope that under your leadership, decisive steps will be taken to ensure transparency, accountability, and justice in this matter of grave national importance.”
