Background and Timeline: Reported on March 26, 2026, the Visakhapatnam Unit of the Director General of GST Intelligence (DGGI) has busted a massive fraudulent network. The investigation utilized advanced data analytics to identify a cluster of entities that showed no commensurate business activity despite massive invoice generation. The syndicate was found to be operating across both Andhra Pradesh and Telangana, creating a significant impact on the tax ecosystem.

Modus Operandi: The suspects created a network of 72 fictitious entities using the stolen Aadhaar and PAN details of unrelated individuals who were projected as proprietors. They rented small, vacant or non-functional shops to obtain GST registrations and open bank accounts, often supported by fabricated rental agreements. Once operational, these shell companies issued invoices totaling ₹1,472 crore without any actual supply of goods or services, allowing for the illegal circulation of ITC.

Victims and Financial Impact: The syndicate fraudulently availed and passed on Input Tax Credit of approximately ₹217 crore, effectively stealing this amount from the national exchequer. The victims include the legitimate taxpayers whose credentials were stolen to prop up the fictitious proprietors of the 72 shell firms. The scale of the fraud indicates a highly structured and centrally controlled operation that spanned multiple industrial sectors.

Investigation and Agencies Involved: The DGGI Visakhapatnam Unit led the probe, employing risk profiling and field-level verification to expose the fictitious entities. The operation revealed that the entire network was orchestrated and centrally controlled through manipulated contact details and login credentials. While field operatives managed premises, enablers processed registrations and coordinated biometric authentication to bypass security filters.

Arrests and Suspects: Two key operatives, Nagaraju Naik and Prabhakar, were arrested under Section 69 of the CGST Act, 2017. The primary mastermind, identified as Dhantla Aadi Reddy alias Anji Reddy, is currently absconding and efforts are underway to trace his digital and physical location. Investigators have seized several digital devices containing the login data and statutory filing records for the dozens of fraudulent accounts.

Broader Implications and Trends: This case highlights the increasing sophistication of tax-related cyberfrauds where identity theft is paired with shell company creation. It demonstrates that “data-driven auditing” by tax authorities is becoming a powerful tool against large-scale organized financial crime. The investigation underscores the need for tighter biometric authentication and physical verification during the initial GST registration process.