Iron Trader Held for ₹26 Cr GST Fraud What It Means for Businesses
In a major enforcement action, GST authorities have arrested an iron trader for orchestrating a ₹26 crore tax fraud through fake invoicing and bogus Input Tax Credit (ITC) claims. The case reveals the increasing vigilance of tax departments and the serious consequences for non-compliance.
How the ₹26 Cr Iron Trader GST Fraud Was Committed
- Fake firms created: The trader floated multiple shell entities with no real business activity.
- Bogus invoices raised: High-value invoices were issued without actual movement of goods.
- ITC passed on: Fraudulent ITC was claimed and passed to other entities, causing revenue loss.
- No e-way bills or transport: Authorities found no evidence of transportation matching the claimed transactions.
- Mismatch in returns: GSTR-1 vs GSTR-3B data showed inconsistencies.
📌 Legal Reference: GST fraud involving fake ITC violates Section 132 of the CGST Act, 2017. The offence is cognizable and non-bailable above ₹5 crore.
Legal Actions Taken by GST Officers
- Arrest under Section 69 of CGST Act after authorization by the Commissioner
- Application of Section 132(1)(c) & 132(1)(i) for availing/passing on ITC without supply
- Frozen bank accounts and cancelled GST registrations of fake firms
- Investigation now extended to buyers who claimed ITC based on these invoices
🧾 CBDT and CBIC are increasingly using AI and data analytics to trace such fraudulent networks.
Compliance Tips to Avoid GST Fraud Scrutiny
Subheading includes keyphrase: iron trader GST fraud
- Verify supplier credentials on GSTN before transacting
- Reconcile GSTR-2B with GSTR-3B monthly
- Avoid availing ITC without receiving goods
- Track all inward/outward supplies with e-way bills
- Use invoice matching tools and alert systems
- Conduct quarterly internal GST audits
Expert Tip: Due Diligence is the New Compliance Lifeline
“One supplier’s fraud can get your ITC blocked and business flagged. Always validate GSTINs and use automated matching tools.”
— CA Rajat Bansal, Indirect Tax Consultant
Frequently Asked Questions (FAQs)
Q1: Is claiming fake ITC a criminal offence?
Yes, under Section 132 of the CGST Act, it is punishable with imprisonment and penalty.
Q2: Can a buyer be liable if their supplier commits GST fraud?
Yes. If you claim ITC on fraudulent invoices, you may lose the credit and face scrutiny—even if unaware.
Q3: What is the threshold for GST arrest?
If tax evasion exceeds ₹5 crore, the offence becomes cognizable and non-bailable.
Summary
The case shows how tax authorities are cracking down on fake ITC claims. Learn how to protect your business from similar scrutiny.