New Delhi/Itanagar, April 2 (NationPress) The Enforcement Directorate (ED) has initiated a legal complaint before a Special PMLA Court in Arunachal Pradesh under the Prevention of Money Laundering Act (PMLA), 2002, regarding a purported fake Input Tax Credit (ITC) scheme estimated at Rs 116 crore, as confirmed by the central investigative body on Thursday.

The ED’s Itanagar Sub-Zonal Office submitted the prosecution complaint to the Special Court (PMLA) in Yupia, Arunachal Pradesh, concerning the fraudulent ITC operation involving M/s Amit Traders and other associated entities.

This legal action has been undertaken under various sections of the PMLA for the crime of money laundering, as stated by an official announcement.

The investigation by the ED commenced based on an FIR lodged by the Bureau of Investigation (Economic Offences) at the Guwahati Police Station, following a complaint from the State Tax Department of Assam. The complaint alleged fraudulent claims and circulation of ITC based on fictitious invoices without any actual goods being supplied. These offenses are categorized as scheduled offenses under the PMLA.

The ED’s findings have uncovered a sophisticated network of non-existent entities established for the creation and circulation of fraudulent ITC through the issuance of invoices lacking actual goods or services.

Additionally, it was discovered that M/s Shree Ram Enterprises played a key role in generating fraudulent ITC totaling around Rs 116 crore, which was then layered and funneled through several shell companies such as M/s Amit Traders, M/s Nemchand Singh Traders, M/s Yogesh Traders, M/s Paras Traders, M/s Shri Mahalakshmi Enterprises, and M/s Technofab International.

Moreover, it has been confirmed that M/s Amit Traders is a fictitious entity established to facilitate the fraudulent claiming and transfer of ITC, having reported high-value transactions without any legitimate business infrastructure or real movement of goods, thus serving as a conduit in the fraudulent ITC scheme.

The investigation further disclosed that M/s Shri Mahalakshmi Enterprises and M/s Technofab International, represented by Ubaid Rehman, are also fictitious entities created solely for the layering and distribution of fraudulent ITC, with M/s Technofab International acting as a central conduit within the network.

Additionally, funds totaling approximately Rs 51 crore were transferred from M/s Prisha Exim to M/s Technofab International's bank account based on fictitious invoices, devoid of any authentic supply of goods.

Further inquiries revealed that instead of being used for legitimate business activities, these funds were diverted to various unrelated third-party bank accounts, indicating intentional layering, diversion, and dissipation of the proceeds of crime.

The financial investigation indicates that the bank accounts of these entities merely acted as pass-through channels for laundering proceeds of crime.

The investigation revealed that the proceeds of crime were ultimately redirected to beneficiary entities including M/s Prisha Exim, which claimed and utilized fraudulent ITC amounting to approximately Rs 7.39 crore.

The activities involved in the generation, layering, and utilization of fraudulent ITC align with processes and activities connected with proceeds of crime under Section 3 of the PMLA.

Moreover, the investigation found that most entities within the chain were non-existent at their declared business locations, and summons issued under Section 50 of the PMLA went unserved, confirming their fictitious status.

Statements collected during the investigation reportedly support the method of issuing invoices without actual goods supply and the use of such ITC to settle GST liabilities.

Throughout the investigation, search operations were executed under Section 17 of the PMLA, leading to the seizure of incriminating documents, GST records, and digital evidence.

The Adjudicating Authority noted in its order dated February 24, 2026, that the seized materials prima facie indicate a lack of genuine goods supply and the presence of fictitious invoicing.

The ED has taken steps to secure the proceeds of crime by provisionally attaching immovable assets valued at Rs 3.30 crore in the name of M/s Prisha Electricals, representing the equivalent value of the proceeds of crime, as per the provisions of the PMLA, 2002.

The case is currently under review by the Special Court (PMLA) in Yupia, and further investigations are ongoing.