Uttarakhand GST Dept. busts syndicate that covered-up illegal timber sale

Employing digital tracking and electronic surveillance, Uttarakhand tax authorities arrested a gang of traders who planned to set up bogus companies to provide legal cover for their unlawful trade in timber and related products and escape GST worth crores of rupees, officials said on Sunday.

According to them, the Uttarakhand GST department initiated an extensive search and seizure operation called ‘Operation D Day-Rising Woods’ to uncover the racket in the Jaspur area of Udham Singh Nagar district.

Udham Singh Nagar is one of the country’s largest timber markets, and timber and its products are supplied from here.

Investigators believe people from other states, including Uttar Pradesh, Haryana, Delhi, Bihar, and Rajasthan, are involved.

The operation encompassed 27 teams and over 300 tax and forensic officers, as well as financial technology experts, who raided 27 commercial facilities and the homes of transporters, attorneys, and chartered accountants.

Investigators who have been following these illicit networks for the past nine months discovered many firms registered in the name of a single person with the express goal of scamming tax authorities. They suspect the accused devised a scheme to defraud the GST regime since its adoption in 2017, by providing legal cover to the bogus entities in order to demonstrate procurement of raw materials from the black market. The investigators suspect that bank staff 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.

Joint commissioner of the Special Investigations Bureau Ranveer Singh said, “The modus operandi was to first launch bogus firms that only operated on paper. Timber-related businesses were obtaining raw materials from the black market and passing the phoney companies off as their real suppliers by receiving purchase orders and invoices from them. They gave these fraudulent businesses input tax credits, which cost the government a tonne of money.”

At first glance, it appears that more than Rs 18 crore in taxes have been evaded out of a sales of over Rs 100 crore.

On March 4, at 11 a.m., a search and seizure operation began and lasted into the wee hours of the night. According to Rajneesh Yashwasthi, deputy commissioner of the Special Investigation Bureau, teams have seized a significant number of documents, electronic devices like smartphones, laptops, and tablets, stamps, bill books, debit and credit cards, chequebooks, and signed blank checks. “To authenticate the information taken from the electronic devices, we enlisted the aid of forensic specialists. During the operation, Rs 7 lakh in cash was also taken. The district administration has assisted in sealing businesses and unregistered locations that were discovered to be locked, he continued.