GST evasion of Rs 105 crore over the last one year was detected from a cigarette manufacturing unit in Indore by the Central GST intelligence team, an official statement said on Monday.
According to officials, one of the masterminds and financial beneficiaries of the tobacco GST evasion who was arrested from Mumbai on June 15 was also found involved in the manufacture and supply of cigarettes from a unit in Indore.
“Investigations conducted by DGGI have unearthed a major tax/ duty/ cess evasion estimated to be about Rs 105 crore only for the period from April 19 till May 20,” the statement issued by Additional Director General of GST Intelligence (DGGI) Bhopal said.
It said that similar evasion is suspected to have been escorted to by the unit during the remainder of GST and erstwhile Central Excise periods as well and added that the total revenue evasion is suspected to be multiple times higher.
Data analysis by the officials of DGGI indicated that this unit had paid a GST of only Rs 2.09 crore and Rs 1.46 crore in the last two financial years, respectively, the statement said. It said that based on further analysis, searches were conducted at five premises connected with this unit during the third week of June.
“The search of factory Ellora Tobacco Company Limited revealed that a secret exit had been set-up on the rear side of the factory from which unaccounted raw materials were brought into the factory and finished goods were cleared,” the statement said.
“The tax evasion syndicate, in this case, involves Directors of the company, Transporters, supporting manufacturers, and raw material suppliers. The number of these persons is presently absconding and has not joined DGGI investigations,” it added.
The officials said that from the interrogation of the factory supervisor, accountant, and other staff, it is estimated that less than five per cent of the production was accounted for since the last many years.
It said that the investigations have revealed that the seized packing material is sufficient to pack 5,000 cartons, each carton containing 12,000 cigarettes, with a total estimated printed MRP of Rs 27 crore.
“It is suspected that there may be a large number of other such clandestine and undeclared godowns in and around Indore which DGGI officials are attempting to locate. The supplier of these two brands of packing materials has confirmed the unaccounted supply of about 1500 Cartons per month,” the statement said.
It said that the financial investigations into the dealings of the beneficiaries indicated that he had opened a media house in which he declared his circulation of newspaper copies at 1.2-1.5 lakh per day while actually circulation was only 4000-6000 per day.
“Thus, the mastermind of this fraud laundered huge amounts of illicit wealth earned from illicit pan masala/ cigarettes business by declaring the fraudulent sale of newspapers and also booked fictitious advertising incomes,” the statement said.