Fake GST ITC scam: Delhi CGST arrests iron-steel trader over ₹25.22 crore fraud
Synopsis
Delhi's CGST Anti-Evasion Branch has arrested an iron and steel trader for a ₹25.22 crore fake ITC scam backed by ₹140.14 crore in bogus invoices — with suppliers found non-existent or cancelled and goods never actually received. The accused is in 14-day judicial custody as investigators probe the full network.
Key Takeaways
CGST Delhi South Commissionerate arrested the proprietor of an iron and steel trading firm on 17 September 2026 .
Alleged fraudulent ITC of ₹25.22 crore was availed and passed on via bogus invoices worth approximately ₹140.14 crore .
Several supplier firms were found to be non-existent, non-functional, suspended, or cancelled ; no actual goods were received.
The accused was arrested under Section 69 of the CGST Act and remanded to 14 days of judicial custody by the Patiala House Court .
Investigation is ongoing to identify other entities and the full extent of the fraud network.
The action is part of a wider CGST enforcement drive; in August 2026 , a ₹160 crore evasion case was cracked in Telangana .
The Anti-Evasion Branch of the Central Goods and Services Tax (CGST) department, Delhi South Commissionerate, on 17 September 2026 arrested the proprietor of an iron and steel trading firm for allegedly availing, utilising, and passing on fraudulent Input Tax Credit (ITC) worth more than ₹25.22 crore through bogus invoices valued at approximately ₹140.14 crore, according to an official Finance Ministry statement.
What the Investigation Found
Investigators found that the firm had claimed inadmissible ITC on the basis of invoices issued by multiple supplier firms, several of which were found to be non-existent, non-functional, suspended, or cancelled. Field verification further established that some suppliers were not carrying out any genuine business activity from their declared places of business.
The probe additionally revealed that the accused firm had allegedly claimed ITC without the actual receipt of goods and subsequently passed on the fraudulent credit to various recipients through invoices issued without any corresponding supply of goods — a practice that, according to officials, directly causes revenue losses to the exchequer.
Arrest and Court Remand
Based on evidence gathered during the investigation and statements recorded, the proprietor was arrested on 17 September under Section 69 of the CGST Act. The accused was subsequently produced before the Patiala House Court in New Delhi, which remanded him to 14 days of judicial custody.
Part of a Wider Enforcement Drive
The Finance Ministry described the arrest as part of an ongoing enforcement drive against fraudulent ITC claims under the GST regime. The CGST department reiterated its commitment to taking strict action against tax evasion and fraudulent ITC networks. This comes amid a broader national crackdown — in August 2026, the Hyderabad CGST Zone unearthed a clandestine pan masala and tobacco manufacturing unit in Telangana's Medchal-Malkajgiri district, detecting duty and cess evasion of approximately ₹160 crore and arresting a key accused in that case.
What Happens Next
The ministry confirmed that further investigation is underway to identify the full extent of the alleged GST fraud and to ascertain the involvement of other entities linked to the transactions. The CGST department's scrutiny of fake-invoice networks in the iron and steel sector is expected to widen as officials trace the trail of fraudulent credits passed downstream.
Point of View
But critics have long argued that real-time invoice matching on the GST portal should have caught these mismatches far earlier. The question regulators must answer is why field verification, rather than automated system flags, remains the primary detection tool for frauds of this magnitude.
NationPress
18 Sept 2026
Frequently Asked Questions
What is the fake GST ITC scam for which the Delhi trader was arrested?
The accused proprietor of an iron and steel trading firm allegedly availed, utilised, and passed on fraudulent Input Tax Credit (ITC) worth more than ₹25.22 crore through bogus invoices valued at approximately ₹140.14 crore. The supplier firms used to generate these invoices were found to be non-existent, non-functional, suspended, or cancelled, and no actual goods were received against the claimed credits.
Under which law was the iron and steel trader arrested?
The proprietor was arrested under Section 69 of the CGST Act, which empowers CGST officers to arrest a person believed to have committed a cognisable and non-bailable offence under the GST law. Following arrest, the accused was produced before the Patiala House Court in New Delhi.
What did the Patiala House Court decide after the arrest?
The Patiala House Court remanded the accused to 14 days of judicial custody after he was produced before it following the arrest on 17 September 2026.
Is this part of a broader GST fraud crackdown?
Yes. The Finance Ministry described the arrest as part of an ongoing enforcement drive against fraudulent ITC claims under the GST regime. In August 2026, the Hyderabad CGST Zone separately detected duty and cess evasion of about ₹160 crore at a clandestine pan masala and tobacco unit in Telangana's Medchal-Malkajgiri district.
What happens next in the Delhi CGST investigation?
Further investigation is underway to identify the full extent of the alleged GST fraud and to ascertain the involvement of other entities linked to the transactions. Authorities are expected to trace how the fraudulent ITC was passed on downstream to various recipients.
