Intelligence-Led Operation Uncovers Massive Input Tax Credit Scam
The Punjab Taxation Department unearthed a major Punjab GST evasion racket involving fraudulent Input Tax Credit (ITC) claims worth approximately ₹22.53 crore.
Finance, Planning, Excise, and Taxation Minister Harpal Singh Cheema announced the breakthrough following a late-night operational inspection in Mandi Gobindgarh.
Enforcement officials targeted M/s Jagat Metals Pvt. Ltd., a long-standing industrial unit operating in the region’s prominent iron and steel manufacturing hub.
The targeted firm deposited an immediate cash recovery of ₹9.50 crore in State GST (SGST) right on the spot when confronted with documentary evidence.
Key Operational Metrics and Case Details
| Investigation Parameter | Case Details and Financial Metrics |
| Primary Targeted Firm | M/s Jagat Metals Pvt. Ltd., Mandi Gobindgarh |
| Total Estimated Tax Evasion | ₹22.53 Crore (Fraudulent ITC Claims) |
| On-the-Spot Cash Recovery | ₹9.50 Crore deposited in cash as SGST |
| Primary Modus Operandi | Availing ITC from suppliers with cancelled GST registrations |
| Enforcement Inspection Date | September 7, 2026 (Extended late into the night) |
Meticulous data analysis revealed that the firm routinely claimed input tax credits linked directly to vendors whose GST registrations were already cancelled by taxation authorities.
The initial investigation further uncovered that intermediate suppliers across the supply chain engaged in similar fraudulent credit claims without delivering actual physical goods.
When state enforcement officers searched the primary business premises on September 7, the management agreed to clear part of their outstanding liability immediately.
Minister Cheema confirmed that state authorities will pursue legal action against all operational entities and intermediaries involved in facilitating these fake billing transactions.
Investigative Scope and Next Steps
| Agency / Verification Task | Primary Focus Area |
| Tax Analytics Wing | Mapping the full supply chain to isolate fake intermediary bills |
| E-Way Bill & Transit Audit | Verifying weighment slips, toll records, and transport logs |
| Banking Audit Teams | Tracing money trails and circular transactions across accounts |
| Recovery Cell | Initiating legal proceedings to secure the remaining ₹13.03 crore dues |
Taxation officers are currently verifying physical goods movement, e-way bill records, vehicle registration details, and weighment slips associated with all flagged invoices.
Specialized forensic auditors are tracking banking trails to determine whether financial transfers were genuine or part of a circular billing scheme.
Minister Harpal Singh Cheema reaffirmed the state government’s zero-tolerance policy against tax fraud, warning that fraudulent actors will face severe legal penalties.
He assured honest taxpayers that compliant businesses will continue to receive seamless operational support from state taxation authorities.
Businesses seeking information on compliant tax filings and verification protocols can visit the official GST Council Portal.
As verification continues across intermediate firms, this massive crackdown on the Punjab GST evasion racket highlights the state’s reliance on data analytics to protect public revenue.