CGST Delhi South arrests iron and steel trader in Rs 25.22 crore ITC fraud case

The latest market report highlights that The Central Goods and Services Tax (CGST) Delhi South Commissionerate has arrested the proprietor of an iron and steel trading firm for allegedly availing, utilising and passing on inadmissible Input Tax Credit (ITC) of more than Rs 25.22 crore through bogus invoices worth around Rs 140.14 crore, the Finance Ministry stated on September 18.

The arrest was made by the Anti-Evasion Branch of the CGST Delhi South Commissionerate as part of its enforcement drive against fraudulent ITC claims. The proprietor was arrested on September 17 under Section 69 of the Central Goods and Services Tax (CGST) Act, 2017, and produced before the Patiala House Court, which remanded him to judicial custody for 14 days, the ministry stated.

According to the ministry, the investigation found that the firm had claimed ITC based on invoices issued by multiple suppliers. Several of these firms were found to be non-existent, non-functional, suspended or cancelled.

“Field verification additionally established that certain suppliers had no genuine business activity at their announced places of business,” the ministry stated.

The investigation further found that the firm had claimed ITC without actually receiving the goods. The credit was subsequently passed on to other recipients through invoices that were not backed by corresponding supplies of goods, it stated.

The ministry stated the arrest followed evidence gathered during the investigation and statements recorded under Section 70 of the CGST Act, 2017.

The case involves alleged fraudulent ITC of more than Rs 25.22 crore against invoices worth approximately Rs 140.14 crore. ITC allows businesses to offset eligible GST paid on inputs against their tax liability, subject to conditions prescribed under the law.

“Further investigation in the case is under progress,” it stated.