Posted on 08 Jul 2025
Authorities in India have begun a large-scale inspection drive against scrap dealers suspected of avoiding Goods and Services Tax (GST), Kallanish learns.
The State GST (SGST) department has deployed inspection teams across various locations to verify records, physical stock, and transport documentation.
The crackdown aims to identify dealers engaged in issuing fake invoices, generating bogus e-way bills, and fraudulently claiming Input Tax Credit (ITC) without genuine scrap movement.
The drive was triggered by intelligence inputs indicating large-scale malpractices in the secondary metals trade.
“There’s a lot of misuse of GST rules in the scrap business, which hurts government revenue and creates unfair competition,” a senior SGST official highlights.
Officials are also checking vehicle movement, toll records, and weighbridge slips to find mismatches. Sources say some traders may have claimed tax refunds without moving any scrap in or out.
"This move was long overdue," says a Mumbai-based scrap trader. "For years, smaller yards have operated in the shadows with minimal documentation. Formal players are at a disadvantage, and this kind of enforcement is necessary to level the playing field."
Industry participants say the drive is expected to impact unorganised scrap traders, particularly those operating with limited compliance frameworks.
Although no official numbers have been shared yet, the department has said that inspections will increase in the coming weeks.
On the price impact, a Ludhiana-based scrap trader notes, “Punjab and the northern belt may see the biggest impact from the GST raids, as they are major scrap hubs with many informal dealers. This could tighten supply and support scrap prices briefly, though weak finished steel demand may limit any major rise.”
Market experts say the crackdown could make the domestic scrap trade more transparent, though it may cause some short-term disruptions in certain areas.
India is one of the world’s biggest scrap users, with locally collected and processed scrap playing a key role in supplying material for induction furnace steelmaking.
Source:Kallanish
