Massive ₹47.12 Cr GST Fraud Uncovered in Iron & Steel Sector
The focus keyphrase GST fraud in iron sector has again made headlines as CGST Delhi South Commissionerate exposed a fake ITC racket involving iron & steel invoices. The accused fraudulently claimed ₹47.12 crore Input Tax Credit without actual supply of goods. Here’s what happened — and how it impacts honest businesses.
What Happened: The ₹47.12 Cr GST Fraud
- Commissionerate: CGST Delhi South
- Sector: Iron & Steel
- Modus Operandi:
- Fake invoices raised without movement of goods
- Bogus supplier network created to pass Input Tax Credit
- ITC wrongly claimed on paper without purchase/supply
- Amount Involved: ₹47.12 crore
- Action Taken: One person arrested under Section 69 of CGST Act
Legal Angle: What Law Says on Fake ITC
| Provision | Legal Reference | Key Takeaway |
|---|---|---|
| Fake ITC | Sec 132(1)(c), CGST Act | Availing input tax credit without supply of goods/services is punishable offence |
| Arrest Power | Sec 69, CGST Act | Commissioner can authorise arrest if offence is cognisable & non-bailable |
| Bail Status | As per law | If ITC > ₹5 crore, offence is non-bailable under Sec 132(1)(i) |
| Penalty | Up to 5 years jail | Plus penalty & reversal of ITC with interest |
Expert View: Why Small Businesses Must Be Cautious
“Even if you buy from a fraudulent supplier unknowingly, your ITC can be blocked or reversed,” says a tax expert at Efiletax.
This is why vendor due diligence and proper documentation are critical under Rule 36(4) and Section 16 of the CGST Act.
Tips for Genuine Taxpayers to Stay Safe
- ✅ Verify GSTIN of all suppliers on GST portal
- ✅ Ensure actual movement of goods – keep eWay Bill & transport records
- ✅ Match GSTR-2B regularly with purchase register
- ✅ Avoid vendors offering unusually high margins or no physical trace
- ✅ Maintain invoices and delivery proof for every purchase
- ✅ File GSTR-3B and GSTR-1 on time to avoid suspicion
Why This GST Fraud in Iron Sector Matters
This case isn’t isolated. Iron, steel, scrap, and e-waste sectors are prone to ITC fraud due to:
- High-value goods
- Often unorganised supplier chains
- Difficulty in tracking actual movement
- Shell companies used for paper billing
GSTN has intensified scrutiny using AI-based red flags in returns and eWay Bills. Any mismatch can trigger a notice or DRC-01.
FAQs
Q1. What if I’ve already claimed ITC from a fake vendor unknowingly?
Ans: You’ll have to reverse ITC with 18% interest and may face penalty. Immediate corrective action is advised.
Q2. Can I claim ITC if the supplier doesn’t file GSTR-1?
Ans: No. You can only claim ITC if it appears in your GSTR-2B.
Q3. Can CGST arrest without notice?
Ans: Yes, under Sec 69, arrest can be made if the commissioner believes tax evasion exceeds ₹5 crore.
Summary
CGST busts ₹47.12 crore GST fraud in iron sector via fake ITC claims. Here’s how taxpayers can stay safe from ITC traps and avoid penalties.
Conclusion: Don’t Get Caught in ITC Crossfire
GST fraud in iron sector cases like this show that even honest businesses can face heat if they’re not cautious. Efiletax helps you ensure ITC compliance, vendor checks, and GSTR reconciliation — so you stay stress-free.