New Delhi/Itanagar: The Enforcement Directorate (ED) has filed a prosecution complaint before a Special PMLA Court in Arunachal Pradesh under the Prevention of Money Laundering Act (PMLA), 2002, in connection with an alleged fake Input Tax Credit (ITC) racket worth Rs 116 crore, the central probe agency said on Thursday.
The ED’s Itanagar Sub-Zonal Office filed the prosecution complaint before the Special Court (PMLA) in Yupia, Arunachal Pradesh, under the provisions of the PMLA, 2002, in connection with the fake ITC racket involving M/s Amit Traders and other entities.
The prosecution complaint has been filed under various sections of the PMLA for the offence of money laundering, an official statement said.
The ED initiated the investigation under the provisions of the PMLA on the basis of an FIR registered by the Bureau of Investigation (Economic Offences), Police Station, Guwahati, based on a complaint filed by the State Tax Department, Assam, alleging fraudulent availment and circulation of ITC on the basis of fictitious invoices without actual supply of goods. The offences are scheduled offences under the PMLA.
According to the statement, the ED investigation has revealed that a well-organised network of fictitious and non-existent entities was created for the generation and circulation of fraudulent ITC through the issuance of invoices without actual supply of goods or services.
It has further been revealed that M/s Shree Ram Enterprises was the principal entity involved in the generation of fraudulent ITC amounting to approximately Rs 116 crore, which was subsequently layered and routed through multiple shell entities including M/s Amit Traders, M/s Nemchand Singh Traders, M/s Yogesh Traders, M/s Paras Traders, M/s Shri Mahalakshmi Enterprises and M/s Technofab International.
It has also been revealed that M/s Amit Traders is a non-existent entity created to facilitate fraudulent availment and passing on of ITC, having declared high-value transactions without any corresponding business infrastructure or actual movement of goods, thereby acting as a conduit in the fake ITC chain.
The investigation further revealed that M/s Shri Mahalakshmi Enterprises and M/s Technofab International, represented by Ubaid Rehman, are fictitious entities created solely for layering and circulation of fraudulent ITC. M/s Technofab International functioned as a central conduit entity in the network.
It has been further revealed that funds amounting to approximately Rs 51 crore were transferred from M/s Prisha Exim to the bank account of M/s Technofab International on the basis of fictitious invoices without any underlying supply of goods.
Further investigation revealed that instead of being utilised for genuine business purposes, the funds were diverted to multiple unrelated third-party bank accounts, thereby evidencing deliberate layering, diversion, and dissipation of proceeds of crime.
The financial trail indicates that the bank accounts of the entities were used merely as pass-through channels for laundering proceeds of crime.
The investigation further revealed that the proceeds of crime were ultimately routed to beneficiary entities including M/s Prisha Exim, which availed and utilised fraudulent ITC amounting to approximately Rs 7.39 crore.
The transactions involving generation, layering, and utilisation of fraudulent ITC constitute processes and activities connected with proceeds of crime under Section 3 of the PMLA.
The investigation also revealed that most of the entities involved in the chain were non-existent at their declared places of business, and summons issued under Section 50 of the PMLA were returned unserved, establishing their fictitious nature.
Statements recorded during the investigation are stated to corroborate the modus operandi of issuing invoices without supply of goods and utilisation of such ITC for discharge of GST liabilities.
During the course of the investigation, search operations were conducted under Section 17 of the PMLA, leading to the seizure of incriminating documents, GST records, and digital evidence.
The Adjudicating Authority, in its order dated February 24, 2026, observed that the seized material prima facie indicates absence of genuine supply of goods and the existence of fictitious invoicing.
The ED has taken action to secure proceeds of crime by provisionally attaching immovable properties valued at Rs 3.30 crore in the name of M/s Prisha Electricals, representing equivalent value of proceeds of crime, under the provisions of the PMLA, 2002.
The matter is currently before the Special Court (PMLA), Yupia, and further investigation is underway.
(IANS)
