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Punjab Uncovers Rs. 1,549 Crore Fake Billing Scam in Sweeping GST Crackdown

By Manbir Sandhu , 13 May 2025
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Punjab’s taxation authorities have unearthed a massive bogus billing scam involving fraudulent transactions worth Rs. 1,549 crore and blocked Input Tax Credit (ITC) claims totaling Rs. 108.79 crore. In a broad enforcement drive spanning gold, coal, and industrial transactions, the crackdown exposed deep-rooted tax evasion networks operating across Ludhiana, Mandi Gobindgarh, Mohali, and other industrial centers. Finance Minister Harpal Singh Cheema credited the success to data analytics tools developed with IIT Hyderabad and citizen engagement through the ‘Mera Bill’ app. With arrests made and penalties levied, the state is signaling a zero-tolerance policy toward GST fraud.

A Deepening Crackdown on GST Fraud in Punjab

In one of the most sweeping tax enforcement operations in recent memory, Punjab’s taxation department has exposed an elaborate network of fictitious trade practices, where unscrupulous traders issued fraudulent invoices to claim unearned tax benefits under the Goods and Services Tax (GST) regime.

The department, under the leadership of Finance Minister Harpal Singh Cheema, uncovered fake transactions amounting to Rs. 1,549 crore, primarily centered on gold and coal-related trades. The resulting illegal ITC claims—totalling Rs. 108.79 crore—were successfully blocked by the authorities, preventing a substantial drain on public revenue.

Gold and Coal Trades Under Scrutiny

A key focus of the operation was Ludhiana, where investigators detected fraudulent billing of Rs. 900 crore in gold transactions alone. This led to the freezing of Rs. 21 crore worth of ITC.

In a parallel investigation, the department uncovered Rs. 226 crore worth of fraudulent invoicing in coal transactions across Mohali, Kharar, and Kotkapura, effectively blocking another Rs. 12 crore in ITC.

Further audits in Ludhiana and Mandi Gobindgarh revealed fictitious dealings worth Rs. 423 crore, resulting in a blocked ITC of Rs. 75.79 crore. These industrial hubs appear to be central nodes in what officials describe as an “organized and digitally sophisticated” tax evasion ecosystem.

High-Profile Arrests and Ongoing Investigations

As part of the probe, authorities arrested a key suspect accused of orchestrating a fake invoicing racket that siphoned off Rs. 29.50 crore in fraudulent ITC. The accused’s firm reportedly recorded inward supplies worth Rs. 163 crore in FY2023–24 and FY2024–25 from over 60 fictitious firms.

In a separate development, law enforcement intercepted a vehicle traveling from Ranchi to Ludhiana carrying two kilograms of gold without an accompanying invoice. Investigations are ongoing, but authorities believe the consignment may be linked to the larger gold-billing fraud already uncovered.

Extensive Verification and Data-Driven Enforcement

Physical verification of 195 GST-registered firms—comprising 156 central and 39 state registrants—revealed a staggering level of deceit in trade documentation. The majority of these entities were based in Ludhiana (100 firms) and Mandi Gobindgarh (72 firms), with authorities confirming these firms engaged in “paper-only” transactions to fraudulently claim ITC.

The enforcement campaign has been turbocharged by the adoption of 15 AI-powered analytical modules developed in collaboration with IIT Hyderabad. These tools help flag inconsistencies in tax filings, invoice patterns, and supply chain behavior across registered businesses.

Citizen Engagement via 'Mera Bill' App Yields Tangible Gains

A crucial component of the government’s strategy has been involving everyday citizens in the fight against tax fraud. Through the ‘Bill Liyao Inaam Pao’ scheme, consumers are encouraged to upload their purchase bills on the ‘Mera Bill’ app. So far, 4,880 users have received rewards totaling Rs. 2.89 crore.

Additionally, discrepancies in submitted bills have led to penalties amounting to Rs. 9.07 crore and a recovery of Rs. 7.20 crore, underlining the value of crowdsourced compliance.

Political Fallout and GST Collection Milestones

Highlighting the financial turnaround, Finance Minister Cheema noted that under the AAP-led administration, Punjab collected Rs. 62,733 crore in GST revenue over three years—nearly matching the Rs. 63,042 crore collected in five years under the previous Congress-led government.

Cheema strongly criticized opposition parties for allegedly enabling past tax evasion and now attempting to obstruct current enforcement efforts. He accused the Congress, BJP, and Akali Dal of “protecting tax defaulters” and “undermining accountability” in the name of political rivalry.

A New Era of Fiscal Accountability

The scale and sophistication of the scam underscore the challenges Indian states face in implementing and enforcing the GST regime. However, Punjab’s crackdown may serve as a model for other regions, combining advanced analytics, cross-agency coordination, and public participation to tighten compliance.

As the enforcement net widens, businesses operating in the state—particularly in high-risk sectors like gold, coal, and manufacturing—may find themselves under greater scrutiny. The message from the state is clear: tax fraud will be pursued with precision, prosecution, and public pressure.

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