The Ahmedabad Zonal Unit of the Directorate General of GST Intelligence (DGGI) has arrested Kapil Chugh, the alleged mastermind behind a staggering Rs 1,825-crore GST refund fraud. Chugh was apprehended at the Indira Gandhi International (IGI) Airport on April 19, immediately upon his return from Dubai.
Chugh had fled to Dubai, had evaded investigation and did not respond to 22 consecutive summons issued by the DGGI. Officials have labeled the case as one of the largest GST refund scams ever detected, characterized by a highly organized network of dummy entities and fictitious trade.
“Kapil Chugh emerges as the key mastermind and habitual economic offender who controlled the entire network through dummy firms, employees and close associates. The entities were created using borrowed KYC documents and were found to be non-functional or lacking infrastructure, manpower and genuine business activity at the declared premises,” stated the government after the arrest. Investigations revealed that Chugh, alongside associate Vipin Sharma, controlled numerous dummy firms created using borrowed KYC documents, thatexisted only on paper, without any genuine infrastructure or manpower.
They generated fraudulent Input Tax Credit (ITC) by circulating fake purchase invoices for high-value tobacco products. Simultaneously, they procured low-quality tobacco and smoking mixtures locally at nominal prices.
Not only was he a tax evader, rather he has also been involved in banking frauds. The CBI is also investigating him for using forged documents to secure credit facilities as he has allegedly siphoned Rs 11 crore from Yes Bank by inflating export turnovers.
The SEBI recently took action against his associate, Vipin Sharma, the MD of Elitecon, for inflating company valuations through bogus billing. DGGI officials confirmed that the financial trail showed no genuine commercial activity, with funds being routed through circular transactions or withdrawn in cash to mask the fraud's origin.