The State Goods and Services Tax department has uncovered a major fake iron scrap racket operating across Kanpur city and Kanpur Dehat, unearthing bogus supplies worth Rs 262 crore and fraudulent Input Tax Credit claims amounting to Rs 47.05 crore. In a coordinated operation, 15 dedicated teams comprising SGST officers conducted simultaneous raids across seven business premises registered under different trading entities. Tax authorities have blocked approximately Rs 10 crore in fraudulent Input Tax Credit on the GST common portal to prevent further revenue loss to the state exchequer.
Coordinated Raids Expose Paper-Only Scrap Network
The multi-location enforcement drive was conducted under the direct supervision of Additional Commissioners Sanya Chhabra, Kumar Anand, and Prashant Kumar. Official inspections revealed that multiple registered businesses were non-existent on the ground and operated entirely on paper. Several individuals residing at the registered addresses stated they had no knowledge of any GST registration standing in their names or on their properties. Authorities have initiated proceedings to cancel the registrations of all delinquent entities, while First Information Reports are being lodged against the masterminds and operators behind the fraudulent network. Additional Commissioner Sanya Chhabra stated that the state tax department will sustain targeted enforcement campaigns against organized tax evasion networks across the region.
Verification of City Locations Reveals Dummy Establishments
On-site inspections in urban Kanpur revealed completely bogus setups across several addresses. At Nayapurwa M-Block on Kidwai Nagar Bypass Road, the registered location of M/s Balaji Traders was found non-existent on the ground. The entity had fraudulently declared supplies worth Rs 46.22 crore in statutory returns to claim and pass on Rs 8.32 crore in bogus ITC, all of which was subsequently blocked on the portal by tax officials. In another inspection at Plot Number 12 in Koyla Nagar, the declared address of M/s Devkar Enterprises, officials found an entirely different entity operating under the name M/s Shri Balaji Coal Company. An on-site employee, Shashikant, told inspectors that he had no knowledge of Devkar Enterprises or its declared proprietor.
At 1388/5 Bankelalpuram on Swarn Jayanti Road, officials inspecting M/s Verma Traders located a tiny shop situated at the far left end of a 12-shop commercial complex. Records showed the firm had approximately Rs 1.38 crore in its electronic credit ledger while declaring turnover of Rs 12.94 crore in returns, claiming and passing on Rs 2.33 crore in input credit, which tax authorities promptly blocked. A similar inspection at Ghantaghar for M/s Balaji Enterprises showed the firm was entirely absent on the ground, despite having recorded fake supplies worth Rs 76.99 crore and passing on Rs 13.85 crore in ITC. At Cooperganj, M/s Sunil Trading Company was also found non-existent after declaring sales of Rs 27 crore and routing Rs 4.80 crore in fraudulent credit.
Rural Outposts Used to Funnel Bogus Input Tax Credit
The syndicate extended its reach into Kanpur Dehat to generate fictitious paper transactions away from city commercial centers. An inspection team visiting 40/130 Lalepur, Fatehpur Station Road in Lalpur found M/s BM Traders completely missing from the site. The phone number registered on the official GST portal was switched off, concealing an operation that declared fake transactions worth Rs 28.88 crore and passed on Rs 5.20 crore in fraudulent ITC.
In Umran, Akbarpur, investigators visited the registered site of M/s Pooja Udyog, only to find another ghost firm with no physical presence or commercial activity. Official records showed the firm had declared fake supplies totaling Rs 70 crore, passing on Rs 12.55 crore in bogus input credit through the GST system before the operation was detected.
Follow for daily updates on cybercrime, corporate fraud, DFIR, hacking, investigations, and digital forensics
