On the basis of specific information regarding large scale GST Evasion and clandestine clearances of Unmanufactured Tobacco without payment of GST by a prominent Sangamner based group, simultaneous searches were conducted before the General Lockdown at various business premises of a prominent manufacturer and supplier of Unmanufactured Tobacco at Sangamner, District Ahmednagar by the Officers of Nashik Regional Unit of Nagpur Zonal Unit.
Unmanufactured Tobacco attracts the highest rate of GST which is almost equivalent to the value of the goods itself and there is scope for large scale evasion in the said sector.
The GST leviable on Unmanufactured Tobacco is 28% plus 71 % Compensation Cess During the Searches, a number of incriminating documents and computerised records were seized and on the spot analysis revealed that the parent entity had cleared large quantities of Unmanufactured Tobacco both manufactured as well as traded without payment of GST.
Further data analysis also revealed that there was heavy evasion of GST payable by the parent entity (5 % GST) on Reverse Charge basis on tobacco leaves procured directly from the Agriculturists from which Unmanufactured Tobacco was manufactured by them. The Brand is famous all over India and consumed is huge quantities not only in Maharashtra but many other States.
During the Searches, an interesting thing came to light that a large number of incriminating documents had also been resumed by the Pune based Investigation Wing of the Income Tax Department during their operations which took place before the DGGI search operations. The records have been requisitioned to strengthen the Departments case.
After Intensive data analysis by the Officers during the Lockdown while working from home, the parent entity was requested to make voluntary payments of GST on Unmanufactured Tobacco, Tobacco Refuse manufactured and traded by them and also pay GST on Reverse Charge basis on Tobacco Leaves procured by them from the farmers.
Repeated persuasion by the Officers led to payments of Rs 74.86 Crores in Cash in April 2021 towards their GST Liabilities along with part payment of Interest making it one of the largest cash recoveries in India by a DGGI Formation during the Lockdown period.
The investigation is expected to pick up pace after the General Lockdown eases.