GST and Economic Crimes in India: A Criminological Perspective

Abstract The Goods and Services Tax (GST), which was implemented in July 2017 as a new tax system on a landmark reform of the Indian tax system, was projected to promote transparency, create an environment of compliance, and unify markets in the country. However, eight years on since its establishment, a parallel economy has emerged, which subsists on the systemic weaknesses that have been realised. The paper challenges the GST based economic crimes using a criminological perspective and thoroughly traces the magnitude of the same, the typology, and the dynamics that support frauds. Drawing on secondary data sources filtered using the government repositories, judicial judgments, and investigative revelations dating between 2017 and 2026, the empirical investigation has shown that groups of illicit Input Tax Credit (ITC) exploitation have triggered identified evasion of over ₹7 lakh crore on over 91,000 adjudicated cases. The paper has identified three criminologically significant trends: expanding professional facilitators; exploiting digital governance loopholes; and judicial responses that have expanded mastermind responsibility. Also, this paper explores the use of technologies such as AI detection and forensic data analytics, which will set an indefinite arms race between enforcement and fraudsters. The paper highlights the fact that GST fraud requires not only the application of broader punishment but also a sophisticated understanding of the offender networks, opportunity structures and professional facilitators such as chartered accountants and consultants who are willing to consciously make such schemes to earn money. To sum up, GST fraud is not a simple act of tax evasion, but it is a planned and organized attempt to undermine economic order, so it requires an integrated method of action that incorporates the theory of criminology, regulatory reform, and judicial discretion. Keywords: Criminology, Economic Crime, Goods and Services Tax, Input Tax Credit Fraud, White-Collar Crime. 1. Introduction Goods and Services Tax (GST), which was enacted on 1 July 2017, is the most radical reform of the Indian fiscal framework since the country gained its independence. The reform aimed to alleviate interstate business tension, encourage self-compliance by establishing a strong digital infrastructure, and widen the tax base by bringing together a variety of indirect taxes into one national system under the motto “One Nation, One Tax, One Market”. Eight years later, though the income collections exceeded the expectations net Central GST receipts are at ₹10.26 lakh crore in the year 2024-25, there is a troubling trend that jeopardizes the sustainability of the regime. An advanced shadow economy, which permits itself via the mechanisms that are aimed at ensuring compliance, has thrived. Fraudulent businesses, registration forgery, and organized Input Tax Credit (ITC) fraud have become the picture of things and not the exception. The intensity of the issue is astounding regulators detected 91,370 cases of GST evasion worth ₹7,07,942 crore between 2020-2021 and 2024-2025; 44,938 ITC-fraud cases, worth ₹1,78,541 Crore. Over 42,140 shell companies were identified in a time of two years (2023-25), enabling fraudulent ITC worth ₹1.01crore. As the Orissa High Court observed, such acts "hit the raw nerve of the economic system" and makes the social contract, which makes people pay taxes, even more poignant especially when the daily-wage employees are read about lakhs to crore frauds when struggling with the basic family budget. This paper is based on a criminological approach to analyse GST fraud in India. Although the existing literature has discussed the topic of tax evasion, primarily through economic or legal prisms, criminological analysis of tax evasion has not been adequately studied (focusing on the motivation of the offender, the availability of the opportunity, social response, and system weaknesses). The study will be informing the following questions: What typologies can define GST related economic crime? What are the ways in which criminals take advantage of cracks within the system? What response is taken by regulatory institutions? And what does this tell us of the economic crime in modern India? 2. Review of Literature 2.1 Theoretical Foundations The white-collar crime developed by Sutherland (1949) shifted the focus of criminology off the street to white-collar criminals of professional occupations. According to the regulatory pyramid developed by Braithwaite (2005), the key is to have credible deterrence; otherwise, there is encouragement of exploitation with weak enforcement. According to the crime control theory, which was developed by Felson and Clarke (1998), crime does occur when the offenders are motivated, and the right target is available in the face of incompetent guardianship (in the case of the GST, ITC mechanism is the target and digital verification systems are the guardians). 2.2 GST Architecture and Vulnerability The GST regime includes criminologically pre-disposed elements, specifically, the ITC regime where the fictitious invoices are allowed; they lack supporting supply. The Orissa High Court observed that the inefficiency of electronic trails is used by fraudsters through a nationwide network defrauding GST system. Section 135 of CGST Act, 2017 assumes the existence of a culpable mental state, which is the issue that Verma (2025) questions and emphasizes, which may raise constitutional issues. DGGI uses AI and forensic analytics; but the criminals use technology to create forged documentation, this was discovered in an investigation into the restaurant industry ₹70,000 crore of undisclosed sales. 2.3 Indian Research on GST Evasion According to Verma (2025), erroneous ITC claims that occur due to software malfunctions receive equal punishments as wilful evasion, and thus it violates the concepts of criminal law. There are differences in judicial methods: the Madras High Court demands a reasonable belief to arrest, but the Telangana High Court enforces pre-assessment authority, the hallmark of doctrinal doubt. CEIB has suggested the application of the PMLA upon identifying ₹4,000 crore in ITC fraud. Madan (2024) places the context of GST evasion in the context of revenue losses, but criminological studies of the offender networks are minimal. 2.4 Comparative Insights Systems of VAT in Europe face similar an analogous fraud known as missing-trader; the UK estimates billions of losses every year. The Proceeds of Crime Act of the UK has a greater knowledge requirement than the reverse burden of section 135 of India. According to ATFCP (2018), GST limited trade-based border financial crimes because under-invoicing loses ITC. The Cheek norm in the United States requires evidence of wrongful action with intentionality, unlike the presumption of the Section 135 of CGST Act, 2017 in India. The experience of India is typical of the global trends and keeps certain specifics: a large network of digital infrastructure, a continuing informal economy, and a systemic coordination of federal and state. 3. Need for the Study This question is driven by a number of imperatives. To begin with, the scale of the identified GST fraud, ₹7,07,942 crore in a period of five years, requires stringent scholarly examination. When fiscal evasion to the tune of three-quarters of a trillion rupees is the order of the day, the dynamics of fiscal evasion is a matter of national concern. Second, the current body of research on GST fraud is still divided between the judicial rulings, investigation reports, and media coverage. Systemic vulnerabilities and patterns of offenders that are not visible in single cases can be revealed using a holistic approach to criminology. Third, judicial tendency to increase the liability up to the mastermind of frauds provokes very essential questions concerning the responsibilities of the law during the sophisticated crimes in the economic domain. It is vital to analyse this development in jurisprudence not only in academic annotations but also in evidence-based policy. Fourth, because the government uses artificial intelligence to fight fraud, including facial recognition and complex analytics, criminological understanding of the way offenders adapt is essential. Issues that lie in human motivation, opportunity and social structure can only be addressed by technological means. Lastly, the criminological approach enlightens on what the data can manifest: actual economic damage, undermined societal confidence and failed governance. When the citizens doubt that the phantom enterprises are the legitimate contributors, the validity of the fiscal system is at stake. 4. Objectives To measure and document the intensity, direction and tendency of GST related economic crime in India between 2017 and 2025, based on governmental documents and research. To determine the essential modalities of GST fraud, including focusing on networks of counterfeit companies, ITC controls, and abuse of computer infrastructure. To examine the criminogenic factors, embedded in GST structure and application, such as to expose systemic possibilities that facilitate economic crime. To analyse court and regulatory responses, with a particular analysis of the changing jurisprudence of offender liability and enforcement mechanisms. In producing a comprehensive criminological framework of GST fraud, the opportunity theory, white-collar crime studies, and institutional theory must be combined. 5. Hypotheses According to the theoretical framework and the initial evidence the following hypotheses are tested in the study: H1: GST fraud in India is organised and networked not individual and professional facilitators (chartered accountants, consultants, insiders) also have key roles. H2: The Input Tax Credit system is the most susceptible to attack, and the shell companies and the fake i