The Directorate General of GST Intelligence (DGGI) has arrested Kapil Chugh, the alleged mastermind behind a ₹1,825 crore GST refund fraud, at Delhi’s Indira Gandhi International (IGI) Airport after he returned from Dubai, the Ministry of Finance said on Monday.
Chugh, who had been wanted in multiple economic offence cases, was apprehended by officials of the DGGI’s Ahmedabad Zonal Unit on April 19. According to the ministry, he had “evaded investigation and did not respond to multiple summons (22 in all)… and never joined investigations” after allegedly fleeing to Dubai following the fraud.
Investigations revealed that Chugh, along with associate Vipin Sharma, ran a structured network to fraudulently claim input tax credit (ITC) and encash it through refund claims linked to zero-rated supplies.
“Chugh emerges as the key mastermind and habitual economic offender who controlled the entire network through dummy firms, employees, and close associates,” the ministry said.
The entities involved were created using borrowed KYC documents and were found to be non-operational, lacking infrastructure, manpower, or genuine business activity. Dummy directors and proprietors were used as name-lenders and were paid fixed monthly cash amounts, while all operations were centrally managed by the accused.
Officials found that the network generated fraudulent ITC by issuing fake purchase invoices without actual movement of goods. High-value tobacco products were shown on paper to inflate credit, with invoices routed through multiple intermediary firms to create a layered chain of transactions.
The accumulated ITC was then channelled into select entities presented as exporters, particularly from the Kandla Special Economic Zone. These firms claimed refunds on zero-rated supplies without paying tax.
In parallel, low-value or inferior tobacco products were procured locally, often without invoices, and falsely declared as premium products such as kimam or jarda for export at inflated prices.
The ministry, in its statement, said that there was no manufacturing setup to justify such conversions.
Investigators said the exports were largely fictitious or significantly overstated. E-way bills were generated using “doubtful or repeated vehicle numbers”, and transport documents were fabricated to support the transactions.
Financial analysis showed minimal or circular movement of funds despite high-value transactions.
As per the ministry, payments were routed through related entities or withdrawn in cash, with no evidence of genuine supplier payments or logistics expenses. Multiple firms also shared common contact details, IP addresses, and accounting personnel, indicating centralised control.
The probe also found that Chugh allegedly inflated export turnover to siphon off around ₹11 crore from Yes Bank. He has been charge-sheeted by the CBI in another case involving fraudulent credit facilities obtained using forged documents.
Separately, the Securities and Exchange Board of India (Sebi) has taken action against Vipin Sharma, managing director of Elitecon, for inflating company valuation through fake turnover linked to GST fraud, the ministry said.
