GST intelligence detects over Rs 17-cr tax evasion by MP cement firm

Two directors of the company were identified as organiser and financial beneficiary of this GST evasion case

The GST intelligence officials have detected over Rs 17 crore tax evasion by a major cement manufacturer in Satna and arrested one of its directors, according to an official statement issued on Wednesday.

They also conducted multiple searches in the states of Madhya Pradesh and Uttar Pradesh from August 5 to August 11 at various premises belonging to the cement manufacturer located at Maihar, Satna and their registered dealers and distributors, it said.

Searches have indicated that substantial quantities of cement and clinker have been supplied clandestinely without payment of Goods & Service Tax (GST) in the states of MP and UP, the statement issued by the Directorate General of GST Intelligence (DGGI), Bhopal zonal unit.

The searches were conducted at Maihar, Satna, Allahabad, Kushinagar, Agra, Kanpur and New Delhi. In all, 28 searches were conducted during the one-week long operation, it said.

During the factory search on Saturday, the team of DGGI officials was surrounded by a mob of people who threatened and interfered with the official proceedings, the statement said.

Immediate assistance from Madhya Pradesh Police was requested which was spontaneously provided. Subsequent operation was conducted under the security cover provided by the Madhya Pradesh Police, it said.

During the operation it has been revealed that more than 400,000 tons of limestone has been procured in excess of what has been declared in the formal records of the company during the period from January till July, 2020, the statement said.

By suppressing the procurement of limestone, the company appears to have manufactured cement and clinker which has been supplied clandestinely to various dealers and units in Madhya Pradesh and Uttar Pradesh without the payment of the GST, it said.

In this process, as per preliminary estimates about Rs 15.1 crore of GST is suspected to have been evaded during the seven-month period from January till July, 2020, the DGGI said.

More than 1.2 million cement bags were found short in stocks when compared with the formal records maintained by the company, it said, adding that these are also suspected to have been supplied clandestinely without payment of GST.

The DGGI officials also recovered cash transaction private records from company officials revealing unaccounted cash credit of more than Rs 7.5 crore for few months period in the year 2018, the statement said.

The GST implication on these transactions is estimated to be about Rs 2.1 crore, it said, adding that unaccounted cash of Rs 52.39 lakh was also recovered by the central GST officials during the searches.

In view of the serious offences committed and the evidences collected, two directors of the company were identified as organiser and financial beneficiary of this GST evasion case.

One of the directors, has been arrested on 12th August, 2020 under the provisions of Central GST Act, 2017, the statement said.

Another director did not join the investigations despite being summoned for three times, it said.

He produced a medical opinion regarding Covid-19 symptoms. However, he has now absconded and is being traced by the officials, the DGGI said.

The absconding director had been earlier convicted for offence under Indian Penal Code in the coal block allocation case by the Delhi District court in the year 2017, it said, without citing further details.

In view of the Covid-19 induced situation all officials followed government directives on social distancing and wore gloves, masks and other protective equipment, the statement added.



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