GST Fraud Exposed: Iron and Steel Traders Charged with ₹87.9 Crore Scam

A major GST fraud running into a staggering ₹87.9 crore has come to light, thanks to the Directorate General of GST Intelligence (DGGI) in Ludhiana. This isn’t just another tax evasion case—it’s a deep-rooted fake billing racket operating right at the heart of India’s iron and steel trade.

The Players Behind the Scam

The DGGI’s probe centred around three trading firms from Mandi Gobindgarh:

Aar Dee Enterprises
Aashi Steel Industries
Abhi Alloys

But it was more than just a local affair. At the centre of it all were Raman Kumar Chaurasia and Devinder Singh, the two masterminds behind the operation. These men allegedly procured goods without actual physical movement—everything was done on paper using fake invoices.

They didn’t act alone. Deepanshu Srivastava and Mohit Kumar, both based in Lucknow, were the ones running the backend. Their role? Managing a shadow network of 37 shell firms, quietly channeling fraudulent Input Tax Credit (ITC). And it didn’t stop there—investigators unearthed an additional 78 bogus business entities spread across the country, adding layers to an already complex web of deceit.

Cracking the Case

So how did authorities catch on?

It began with sharp intelligence work—specifically a well-coordinated effort between the Ludhiana and Lucknow units of the DGGI. Using tech-powered data analytics and extensive record matching, officials started connecting the dots. A trail of fake invoices and suspicious ITC claims emerged—enough to warrant deeper digging.

And dig they did.

The investigating teams backed their case with solid documents and, crucially, obtained voluntary confessions from the main accused. That gave the enforcement agencies the green light to move in.

The Scam, Unpacked

Here’s how the entire operation played out:

Fake Invoice Generation: The scamsters didn’t actually trade iron and steel. Instead, they created a paper trail to make it look like goods were being bought and sold.

Bogus ITC Claims: Using those sham invoices, they fraudulently claimed ITC and reduced their tax liabilities without ever paying real GST on real goods.

Shell Firm Laundering: The fraudulent credits were routed through 37 dummy companies in Uttar Pradesh and another 78 similar outfits across India. This helped disguise the origin and destination of the money, giving the entire racket a cloak of legitimacy.

What Followed Next?

The Arrests: On May 15, 2025, both Chaurasia and Singh were arrested. The charge? Their direct involvement in evading ₹13.4 crore in GST. These arrests weren’t just symbolic—they marked a serious escalation in the government’s crackdown on tax fraud.

But this is far from over. Investigators are now closely tracking the remaining network, especially the facilitators who helped prop up these fake firms.

Why This Scam Rings Alarm Bells

Erosion of Trust: Frauds like this eat away at the credibility of India’s tax system. Honest taxpayers begin to question why they should comply when others get away with theft.

Revenue Drain and Economic Risks: Such large-scale tax evasion affects public finances. With less tax collected, the government struggles to fund infrastructure, welfare, and other critical programmes. Over time, this also risks pushing up inflation.

Sector-Specific Vulnerability: The iron and steel trade, already prone to informal transactions, is particularly exposed. As this and previous scams show, fraudsters exploit paper-only firms and ghost transactions with chilling ease.

A Quick Primer on ITC and Fake Billing

Under GST law, Input Tax Credit (ITC) lets registered businesses deduct the GST paid on purchases from their overall tax liability—but only when the purchase is real and well-documented.

Fake billing, however, involves creating invoices for transactions that never happened. This gives businesses a way to wrongfully claim ITC and dodge taxes.

What’s the Government Doing?

The DGGI and similar agencies have stepped up significantly in recent years. Here’s how enforcement is now carried out:

Data Analytics: Officials cross-check GST returns with e-way bills and banking data to identify mismatches.
Cross-State Surveillance: Fraud rings no longer stop at state borders. Now, intelligence is pooled across regions to track shell companies.
Swift Action: Authorities are quick to suspend GST registrations, freeze assets, and initiate prosecution when fraud is detected.

The signal is clear: the days of fake invoicing flying under the radar are over. If you’re manipulating the GST system, the net is tightening.

What Should Genuine Businesses Keep in Mind?

Be Vigilant About Compliance: Always verify your suppliers. Do proper KYC, and match ITC claims with actual transactions. Don’t take shortcuts.

Steer Clear of Fake Billing, No Matter the Temptation: The cost of getting caught—hefty penalties, deregistration, and loss of reputation—far outweighs any short-term gain.

This crackdown sends a strong message: India is serious about protecting the integrity of the GST framework. The goal is simple—ensure a fair, transparent system where law-abiding businesses don’t lose out to cheats.