GST Department arrests Mastermind behind Tax Evasion of Rs.18 Crore

The Uttarakhand GST Department detained a man on Monday for alleged tax evasion of more than Rs. 18 crore on a Rs. 100-crore sale by constructing multiple fake entities in cooperation with other people.

Shahnawaz Hussain has been missing since March 4, 2023, when the department initiated an extensive search and seizure operation to find him in the Jaspur area of Uttarakhand’s Udham Singh Nagar district. On Sunday, he was apprehended.

The investigation lasted over a year on the orders of Commissioner Tax, Uttarakhand, Dr Ahmed Iqbal, and was led by Additional Commissioner, Kumaon, Rakesh Verma, and was overseen by Joint Commissioner Ranveer Singh. According to officials, it deployed drones, powerful digital tracking and analytic technologies such as FALKAN, Artificial Superintelligence (ASI), and electronic surveillance.

“We have recovered approximately Rs 15 crore to date, of which Rs 2.5 crore is cash and Rs 12.3 crore is IGST outflow. Enforcement action has been taken on the vehicles carrying the fake supplier’s bills,” stated an official who was part of the investigating team.

“In state jurisdictions alone, we have cancelled the registration of more than 90 firms, and 300 bank accounts have been frozen. More arrests will be made in the coming days, and anyone involved in tax evasion cases will face harsh penalties,” he warned.

According to officials, the investigation discovered that a group of traders established bogus companies to provide legal cover for their unlawful trade of timber and related products and to escape GST worth crores of rupees in Udham Singh Nagar, one of the country’s largest timber marketplaces from which timber products are supplied across the country.

The investigators suspected people from other states, including Uttar Pradesh, Haryana, Delhi, Bihar, and Rajasthan.

According to officials, the operation encompassed 27 teams with over 300 tax and forensic officials and financial technology experts raiding 27 commercial facilities and residences of transporters, attorneys, and chartered accountants.

According to the detectives, who had been investigating these unlawful networks for nine months, they discovered many firms in the name of a single person with the sole intention of scamming the tax authorities.

Since the GST regime’s installation in 2017, the accused have devised a scheme to defraud it by providing legal cover to bogus organisations claiming to have procured raw materials from the black market.

The investigators suspect that bank officials assisted them in opening accounts without a thorough KYC process. According to officials, the network had 25 to 30 key individuals who collaborated with one another.

To authenticate the data taken from the electronic devices, the tax investigation team enlisted the assistance of forensic experts. Firms and unregistered businesses that were discovered locked were sealed with the assistance of the district administration.