AIIFA said that the induction furnace sector contributes around 35% to the total steel production in India.

"The associations that represented the industry along with AIIFA in raising the request appeal to the Government are Induction Furnace Association Mandi Gobindgarh, Induction Furnace Association of North India, and Steel Manufacturers Association of Maharashtra, Induction Furnace Association Mandi Gobindgarh, Himachal Pradesh Steel Industries Association and Iron and Steel Rerollers Association, Indore, Madhya Pradesh," said a media release.

According to associations, the scrap steel industry, which manufactures steel by recycling the steel scraps by putting them through induction furnace route, sources its raw material from scrap dealers.

AIIFA stated that the industry is under scrutiny as the scrap dealers have been found guilty of claiming fraudulent input tax credits. Now, to the extent the input tax credit availed is irregular, there is an underpayment of tax which eventually leads to revenue leakage for the government.

While the government bodies have taken efforts to curb tax evasion on account of fraudulent input tax credits, their actions have also created some practical challenges for the manufacturers, they added

"I request the government to consider our recommendations for implementing Reverse Charges Mechanism (RCM) and introducing distinct HSN Codes for the old scrap and new scrap and notify old scrap under Reverse Charges Mechanism (RCM) on sales to manufacturers," Sudhir Goyal, Member, All India Induction Furnaces Association (AIIFA).

"We appreciate that the government has been focusing on supporting business continuity and ease of doing business on an ongoing basis. However, the measures to tame the errant scrap dealers also impact the industry adversely. It has de-railed the existing plans of the industry to invest more in this sector and to achieve the target steel production in India as envisaged in the National Steel Policy, 2017. Therefore, we would like to request the government to consider our recommendations in their upcoming GST Council meet," said Mohinder Gupta, President of Induction Furnace Association Mandi Gobindgarh.

The GST Council is the competent authority to take appropriate decisions on the matter. It may be noted that their next meeting is expected to take place on 18 February.