Kanpur: The State Goods and Services Tax (SGST) department has launched a major crackdown on nine suspected fake firms involved in the iron and scrap trade in Kanpur. Nine teams conducted simultaneous raids at different locations across the city and allegedly detected bogus supplies worth ₹390 crore along with fraudulent input tax credit (ITC) amounting to around ₹72.12 crore.
During the investigation, several firms were found to be non-existent at their declared business premises. In some cases, individuals whose names were used for GST registrations allegedly had no knowledge that firms had been registered in their names.
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The department blocked around ₹1.34 crore in ITC during the operation. Complaints seeking FIRs against eight firms have been submitted to the respective police stations. All nine firms had Central GST registrations, and the department has written to CGST authorities seeking cancellation of their registrations.
Firms allegedly operating only on paper
During inspections, officials found that several firms had no actual business activity at their declared locations. At some premises, other businesses were operating, while transactions in the names of the suspected firms existed only in official records.
A firm in Jarauli was found to be completely non-existent, according to the department. It had allegedly obtained GST registration using fraudulent documents on December 1, 2025, and subsequently passed on around ₹19.14 crore in ITC to other traders.
Chandan Services, based in Basant Vihar, was also found not to be conducting business at its declared premises. The firm had obtained registration on October 28, 2025, and recorded ITC transactions worth around ₹9.93 crore. Officials blocked approximately ₹98.51 lakh in ITC during the action.
At Balaji Enterprises in Rambagh, investigators found no business activity at the declared location. The firm had allegedly passed on around ₹11.50 crore in ITC, of which ₹36 lakh was blocked during the investigation.
₹76 crore in ITC shown by Sarvodaya Nagar firm
Another Balaji Enterprises operating from Sarvodaya Nagar was also found to be allegedly fake. According to the department, the firm had used fraudulent documents and passed on approximately ₹76 crore in ITC to other traders. Officials have reversed around ₹70 crore in ITC linked to the firm.
New Trade Enterprises in Chamanganj was also found without any apparent business activity during the inspection. The firm had allegedly passed on approximately ₹4.74 crore in ITC.
Similarly, Arjun Traders in Dehli Sujanpur was found to have no apparent business existence. According to the department, the firm had passed on around ₹4.83 crore in ITC to other traders.
Abdul Traders in Bhawanipur and Indian Trading Company in Gopal Nagar were also brought under scrutiny. Abdul Traders was found to have passed on approximately ₹4.74 crore in ITC, while purchases recorded by Indian Trading Company were allegedly found to be bogus. The latter firm had passed on around ₹16.83 crore in ITC, and the process of blocking the related credit has been initiated.
₹2 crore turnover within 25 days of registration
Rishabh Traders, registered in Dehli Sujanpur, drew particular attention from investigators. The firm obtained GST registration on July 30, 2026, but allegedly reported sales of around ₹2 crore within just 25 days.
During the inspection, officials could not find the required purchase-related documents at the premises. Following the investigation, around ₹37 lakh was deposited into the government treasury by the trader, according to the department.
Wider ITC network under scrutiny
The SGST department is now analysing data related to other businesses connected with the nine firms. Investigators are examining which traders allegedly claimed the fraudulent ITC, which entities received or passed on the credit and whether additional firms were part of the suspected network.
Officials are also expected to examine banking records, GST returns, e-way bills, purchase and sales documents and ITC transaction patterns. The analysis could help determine whether the supplies shown in official records represented genuine commercial transactions or were allegedly created to facilitate the transfer and utilisation of tax credit.
The detection of alleged ₹390 crore in bogus supplies and ₹72.12 crore in fraudulent ITC has prompted the SGST department to intensify scrutiny of other businesses operating in the iron and scrap sector. Further legal action is expected to be based on the financial, GST and digital records gathered during the investigation.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
