MP cement firm under lens for GST evasion

BHOPAL: The Directorate General of GST Intelligence (DGGI), the enforcement arm of Central Board of Indirect Taxes & Customs (CBIC), has conducted searches in Madhya Pradesh and Uttar Pradesh at various premises belonging to a major cement manufacturer based in MP’s Maihar town, and their registered dealers and distributors, for alleged GST evasion.

One of the directors was arrested on Wednesday under the provisions of Central GST Act, 2017, and another is said to be absconding.

Officials say the company has evaded Rs 17.3 crore in GST, and the searches yielded over Rs 52 crore in cash. This company had been chargesheeted in 2017 in coal block allocation case, they say.

Searches have indicated that substantial quantities of cement and clinker (a raw material) were supplied ‘clandestinely’ in these two states without payment of GST

4 lakh tonne excess limestone procured between January & July

Some 28 DGGI searches were conducted at Maihar and Satna in MP, Allahabad, Kushinagar, Agra and Kanpur in UP and New Delhi during the one-week operation. Operational assistance was also provided by CBIC’s field formations under CGST.

The searches revealed that more than 4 lakh tonne of limestone had been procured between January and July 2020 in excess of what was declared in the records.

By suppressing procurement of limestone, the company appears to have manufactured cement and clinker, which was then supplied clandestinely to various dealers and units in MP and UP without payment of GST, said officials. Corroborating this, more than 12 lakh cement bags were found short in stocks when compared with the company’s records, they added.

As per preliminary estimates about Rs 15.1 crore of GST is suspected to have been evaded during the sevenmonth period from January to July 2020, said officials, adding that DGGI teams recovered private records of cash transaction from company officials, which allegedly pointed at unaccounted cash credit of more than Rs7.5 crore for few months in 2018.

The GST implication on these transactions is estimated to be about Rs 2.1 crore. Unaccounted cash of Rs 52.4 lakh was recovered by the central GST officers.

Since the alleged GST evasion is more than Rs5 crore, the offence is cognizable and non-bailable. Two directors of the firm have been identified as ‘organiser’ and ‘financial beneficiary’ of this alleged GST evasion. One of them was arrested and the other did not join the investigations despite being summoned three times, said officers. He produced a medical ‘opinion’ regarding Covid-19 symptoms, but absconded and teams are out looking for him now. He was convicted in 2017 by a Delhi court in the coal block allocation case, said officials.

During the factory search on August 8, the DGGI team was surrounded by a mob that threatened them and ‘interfered with official proceedings’, said a press statement. The team asked for help from MP police, who responded Immediately. After this incident, the operation was carried out under police security. In view of Covid-19 pandemic , all DGGI officials wore gloves, masks and other protective equipment during the operation.