Rs 100 Crore GST Fraud in Copper Trade: What You Must Know
The recent bust of a ₹100 crore GST fraud in copper goods trade has once again exposed the growing misuse of fake invoices and shell firms in India’s indirect tax ecosystem. According to the DGGI (Directorate General of GST Intelligence), the accused created fake firms to generate bogus invoices, enabling wrongful ITC claims and tax evasion.
Here’s how the scam worked, the legal implications, and what genuine businesses should do to stay compliant.
How the GST Fraud Was Carried Out
The fraud involved a nexus of shell entities and fake invoices. Here’s a breakdown:
| Modus Operandi | Details |
|---|---|
| Fake Firms | Dozens of bogus entities registered using forged documents |
| Bogus Invoicing | Issued invoices for copper goods without actual supply |
| Wrongful ITC | Buyers claimed ITC based on fake invoices |
| No Tax Payment | Taxes were not paid to the government despite raising GST invoices |
| Bank & E-Way Bill Trails | Fabricated or non-existent; used to create illusion of genuine movement |
Focus Keyphrase: GST fraud in copper trade
Legal Action Initiated by GST Authorities
Authorities have invoked the following provisions:
- Section 132 of CGST Act, 2017 – For issuing invoices without supply and availing fraudulent ITC (cognizable and non-bailable offence if amount > ₹5 crore)
- Rule 86A – Blocking of electronic credit ledger for ineligible ITC
- Section 67 – Power of inspection and search
- Section 69 – Power to arrest involved persons
As per latest reports, multiple arrests have been made and the investigation is still ongoing.
What Does This Mean for Honest Taxpayers?
If your business is unknowingly involved in such transactions, even indirectly, you can lose your Input Tax Credit and face legal consequences. Here’s how to stay safe:
✅ Compliance Checklist for Businesses
- Verify vendor GSTIN from GSTN portal
- Match GSTR-2B ITC with actual purchases and payment records
- Avoid paper-only transactions – Insist on genuine e-way bills and transport proofs
- Use invoice-matching software to detect inconsistencies
- Conduct vendor due diligence before onboarding
Expert View: Prevention Over Litigation
“GST frauds are increasingly tech-driven. Businesses must shift from reactive to preventive GST practices. Even if you’re not the fraudster, ignorance won’t protect you.”
– Efiletax Compliance Team
Key Learning: ITC Claimed = Burden of Proof
Under GST law, the onus to prove eligibility of Input Tax Credit lies on the buyer, not the supplier. If your vendor is fake, you lose the credit — regardless of good faith.
Earlier Case Laws You Should Know
| Case | Takeaway |
|---|---|
| Siddharth Enterprises | Buyer not liable if transaction was genuine and supplier defaulted |
| Ecom Gill Coffee Trading | Delhi HC ruled burden of proof on buyer to verify ITC claim validity |
| Canon India Ltd | Supreme Court clarified only proper officers can initiate investigation |
Internal Link
Read: How to verify GST registration status of your vendors
External Link
Official GST Portal Vendor Check: https://services.gst.gov.in
Summary
A ₹100 crore GST fraud in copper trade has been exposed by DGGI. Fake firms issued bogus invoices to claim wrongful ITC. Learn how the scam worked and how genuine businesses can protect themselves under GST laws.
FAQs
Q1. Can I claim ITC if the supplier turns out to be fake later?
Only if you have fulfilled all four conditions under Section 16 of CGST Act — including receipt of goods/services and proof of payment — and the transaction was genuine.
Q2. Will I face penalties if I unknowingly bought from a fake firm?
Yes. You may lose ITC, and in some cases, face proceedings. Due diligence is your legal responsibility.
Q3. What should I do if I suspect a supplier is issuing fake invoices?
Report to GST authorities via DGGI or CBIC helpline and immediately stop transactions until verified.
Conclusion: Stay Ahead of Frauds. File Smart with Efiletax
The ₹100 crore GST fraud in copper trade is a reminder — compliance isn’t optional. One wrong vendor can cost you lakhs.
✅ Partner with Efiletax for GST return filing, vendor verification, and input credit reconciliation.
Stay compliant. Stay safe.