GST Department detects GST Evasion from Trade of Soil from Construction Site

The GST department is investigating the trade in soil dug during the development of a construction site. It believes that it will recover more than Rs.100 crore in tax from developers and traders for soil transactions.

GST department has approached developers to obtain information about transactions involving excavated soil. The developers have been asked for details on the transactions that occurred in the previous six years.

When developing high-rise buildings, the ground must be dug up to establish a foundation and at least two levels of basement. A large amount of soil is dug from construction sites and delivered according to need.

During the investigation, it was discovered that the developers claimed there was a barter agreement between the excavator and the building site developer. The excavators sold the soil in exchange for their services. However, GST officials are dissatisfied with the assertions and are continuing to investigate.

The GST department suspects the soil was sold but no taxes were paid on it.

Meanwhile, the developers have been angry about the inquiry for years. “The probe of previous years’ transactions is not fair. Some of our leaders have expressed concerns to the government,” stated a CREDAI Gujarat officer.

“We will meet with GST officials to express our concerns about this situation. The department’s queries have been forwarded to developers,” stated a senior Surat CREDAI official.