Central GST Intelligence detects ₹225-cr. tax evasion in M.P., arrests three accused

Pan masala and tobacco products being sold during lockdown at 4-5 times their usual market rates, say officials

Madhya Pradesh State GST help centre in Gwalior. File

The Central GST Intelligence has arrested three persons for allegedly evading tax of ₹225 crore in the past nine months by clandestinely manufacturing, supplying and selling “pan masala” and tobacco products in Indore. Tax evasion over the past two years is suspected to be about ₹400 crore.

Finished goods worth ₹1.74 crore, raw material, 15 machines and 10 trucks used for transportation have been seized. The team comprised officials from the enforcement wings of the Central Board of Indirect Taxes & Customs’ Directorate General of GST Intelligence (DDGI) and the Directorate of Revenue Intelligence.

To avoid detection, the masterminds had floated on-paper partnership/proprietorship/HUF firms using three dummy persons. Preliminary investigations by the DGGI indicate that they had also set up eight companies in the real estate, hospitality and media sectors to launder illicit wealth generated from these businesses.

In their statements, some of the accused confessed that in about 70% instances, the “pan masala” and tobacco products were supplied without issuing invoices and without paying tax. Certain suspects have not joined the probe and therefore, they have been summoned.

They are believed to have used more than 70 cargo trucks for orchestrating the tax fraud in the past several years. “Investigations indicate that forged E-way bills were used for transportation, mis-declaring consignor/consignee and description of goods,” said the agency.

The trucks bore “On Press Duty” stickers to evade detection while ferrying the illicit consignments and getting raw material from within Madhya Pradesh and neighbouring States. The drivers were carrying identity cards of an Indore-based newspaper, said the DDGI (Bhopal) statement.

The accused had tried to disrupt searches on a residential and a factory premises through a group of about 30 people. However, assisted by the Madhya Pradesh police, enforcement officials thwarted the attempt.

“The market information suggests that these banned goods were being sold and consumed in some places within Madhya Pradesh and Maharashtra during the lockdown period, at 4-5 times their usual market rates,” said the DGGI.