20 Aug 2026 (Navroze Bureau) : The Directorate General of GST Intelligence (DGGI) has reportedly arrested All-India Furnace Association president KK Garg and his son in connection with an alleged bogus billing case involving suspected GST evasion of Rs 10-15 crore. The case relates to transactions from the 2020-21 financial year, according to sources.
DGGI Takes Action
According to sources cited by The Tribune, Garg was taken by DGGI officials for questioning and was subsequently formally arrested.
The department has not publicly disclosed detailed information about the case, including the exact allegations or the evidence gathered during the investigation.
Bogus Billing Case Under Probe
The investigation reportedly concerns alleged bogus billing and GST evasion involving the industrial sector.
Sources said the suspected tax evasion could be in the range of Rs 10 crore to Rs 15 crore, with transactions dating back to 2020-21.
Industrial Sector Raises Concerns
The arrests have reportedly caused concern among industrialists in Ludhiana and Mandi Gobindgarh, particularly those involved in the steel and furnace industry.
Industry representatives have questioned the manner in which the GST authorities are pursuing cases involving transactions where buyers may not know the source of goods purchased from intermediary dealers.
Industry Body Questions Department’s Approach
World MSME Forum president Badish Jindal criticised the action, describing the Central GST department’s approach as overly aggressive.
Jindal said industry representatives had approached the Union Finance Minister over what they described as a conflict between provisions of the CGST Act, 2017, particularly Sections 16(2) and 158.
Why Buyers Are Raising Questions
Industry representatives have argued that a genuine buyer may purchase scrap from a dealer after paying applicable dues but may have no knowledge of how the dealer acquired the material.
They contend that if earlier parties in the supply chain were involved in tax evasion or bogus billing, a legitimate end buyer could potentially face scrutiny despite being unaware of the alleged irregularities.
Ludhiana and Mandi Gobindgarh Industry in Focus
The development has brought renewed attention to GST compliance in Punjab’s major industrial centres.
Both Ludhiana and Mandi Gobindgarh have significant steel, furnace and scrap-related businesses, making tax compliance and documentation important issues for companies operating across the supply chain.
Investigation Continues
The DGGI has not publicly provided the complete details of the allegations against Garg and his son.
The investigation is expected to examine billing records, financial transactions and the movement of goods to determine the extent of any alleged GST irregularities.
Allegations Yet to Be Proved
The allegations against the industrialist and his son remain subject to investigation and legal proceedings. An arrest or allegation does not by itself establish criminal or tax liability, and the final outcome will depend on the evidence and proceedings before the appropriate authorities.