TIRUPATI: The GST department in Andhra Pradesh is losing crores of rupees in collection of taxes from iron scrap dealers, particularly in the erstwhile Chittoor district. Iron scrap is being moved from one to another location within the state. But fake documents are being used to show as though the scrap is coming from outside the state.
Iron scrap traders are thus evading GST, causing losses to the state government. Efforts to trace the firms involved in the racket are leading to dead ends, as the Aadhaar, PAN details, and bank accounts used belong to people who are not dealing in iron scrap at all.
Sources said whenever GST officials try to raid and capture illegal scrap dealers red-handed, the latter escape as they are getting advance information about the raid. Scrap consignments are being moved before officials arrive. This has led to suspicion that someone within the department is leaking the information, or the illegal dealers are keeping an eye on the GST office.
GST officials are planning counter strategies in this regard.
The modus operandi of illegal dealers involves collecting iron scrap from areas, such as Bangarupalem, Palamaner, and Chittoor. But the invoices show that the material has been purchased in Karnataka or Tamil Nadu. Scrap traders are presenting local purchases as interstate transactions to evade taxes payable to the state government.
In a recent case, GST officials intercepted a truck carrying iron scrap near Palamaner. Its invoices showed that the material had been purchased in Bengaluru and was being transported to Hindupur. However, officials found that the scrap had actually been loaded at Mogili in Bangarupalem mandal, departmental sources said.
Sources said 438 loads of scrap collected around Chittoor in September had been supplied to a company in Naidupeta. The consignments had been illegally shown as interstate purchases, resulting in a tax loss of ₹2.60 crore to the state.
“Scrap collected locally is being shown as material purchased outside the state. This makes it difficult to trace the actual transactions and recover the tax due”, a source in the department said.
It is estimated that the illegal iron scrap network has evaded around ₹11 crore in taxes in September alone. The network has also come under scrutiny over the alleged misuse of identities to obtain GST registrations. Sources said Aadhaar and PAN details, apart from bank accounts of people with no apparent connection to the scrap trade, have been used to conduct transactions worth crores. Some of these people have been issued GST notices over these transactions.
The arrest of one Rehman in Palamaner in connection with transactions worth ₹36 crore over five months ago in the name of a truck driver from Telangana has exposed the misuse of fraudulent GST registrations to claim input tax credit (ITC).
Sources said efforts are under way to trace the key operator accused of controlling the iron scrap trade in the erstwhile Chittoor district and facilitating illegal ITC claims through fraudulent transactions.
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