GST tightens noose around Chittoor scrap mafia
In Short
GST officials have stepped up surveillance on scrap transportation routes to intercept suspicious consignments before they reach their destinations
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GST tightens noose around Chittoor scrap mafia
Tirupati: Locally collected iron scrap, interstate invoices and fictitious GST registrations have allegedly become the tools of an organised tax evasion network in the Chittoor region, prompting authorities to intensify their crackdown.
The racket, believed to have links across Andhra Pradesh, Telangana, Tamil Nadu and Karnataka, is suspected of causing losses worth several crores of rupees to the state exchequer through fraudulent billing and wrongful claims of Input Tax Credit (ITC).
GST officials have stepped up surveillance on scrap transportation routes to intercept suspicious consignments before they reach their destinations. The focus is on identifying vehicles carrying locally sourced material under invoices showing purchases from neighbouring states, thereby concealing the actual nature of transactions and evading taxes. Investigations have revealed that iron scrap collected from areas such as Bangarupalem, Palamaner and Chittoor is allegedly being shown as material purchased in Karnataka or Tamil Nadu. Though the consignments are loaded locally, the accompanying documents reportedly project them as interstate purchases to manipulate tax liabilities.
A recent interception near Palamaner exposed the alleged practice. GST officials stopped a truck carrying iron scrap, with invoices claiming that the material had been purchased in Bengaluru and was being transported to Hindupur. However, preliminary verification reportedly established that the consignment had actually been loaded at Mogili in Bangarupalem mandal.
The scale of the suspected tax evasion has raised serious concerns within the department. According to officials, around 438 consignments collected in the Chittoor region during September were supplied to an industrial unit at Naidupeta. These transactions were allegedly projected as interstate purchases, resulting in a revenue loss of Rs 2.60 crore. The overall tax evasion by the network is estimated at nearly Rs 11 crore in September alone. Similar consignments were reportedly transported to Hindupur, Adoni and Hyderabad using questionable invoices. Investigators have also uncovered the alleged misuse of personal identities to secure bogus GST registrations. Aadhaar and PAN details, along with bank accounts belonging to individuals unconnected with the scrap trade, were reportedly used to facilitate transactions worth crores. Some of these unsuspecting individuals have received GST notices over transactions carried out in their names.
The arrest of Rehman in Palamaner has brought another dimension of the racket to light. He was allegedly linked to transactions worth Rs 36 crore over five months using the identity of a Telangana-based truck driver. The case has exposed suspected fraudulent registrations and wrongful ITC claims. Officials are also investigating the role of an alleged key operator believed to be controlling the scrap trade and facilitating illegal transactions.
Meanwhile, suspicions that information about inspection schedules is reaching traders have complicated enforcement efforts. GST officials have reportedly approached the government seeking permission to use private vehicles for surprise inspections to prevent advance leaks.
The department has also held discussions with Chittoor collector Sumit Kumar and joint collector Adarsh Rajendran on coordinated action. In a recent meeting in Tirupati, GST joint commissioner Harshavardhan and deputy commissioner Srinivasulu Naidu urged scrap dealers to sell material directly to industries. Traders, however, said industrial units were reluctant to purchase scrap directly from small collectors.
