A major cement manufacturer was caught supplying large quantities without paying taxes.

A major cement manufacturer was caught supplying large quantities without paying taxes.

The Directorate General of GST Intelligence (DGGI) conducted 28 searches in Delhi, Madhya Pradesh and Uttar Pradesh after a major cement manufacturer was caught supplying large quantities without paying taxes.

One company director has been arrested, while the other has not joined the investigation. The missing director was earlier convicted in a coal block allocations case by a Delhi court in 2017.

The DGGI found that more than 12 lakh cement bags were short in the stocks when compared with the formal records maintained by the company.

The enforcement arm of the Central Board of Indirect Taxes & Customs (CBIC) carried out the operation from August 5 to 11 in various premises linked to the manufacturer at Maihar and Satna in Madhya Pradesh, and their registered dealers and distributors.

As it turned out, substantial quantities of cement and clinker were supplied clandestinely.

Searches were also conducted in Allahabad, Kushinagar, Agra and Kanpur. Preliminary findings revealed that over four lakh tonnes of limestone had been procured in excess of what was declared in the formal records of the company from January to July.

Police security during search

During a factory search on August 8, a DGGI team was surrounded by a mob. The subsequent operation was carried out undersecurity provided by the Madhya Pradesh police.

“By suppressing the procurement of limestone, the company appears to have manufactured the cement and clinker which have been supplied clandestinely to various dealers and units… in this process, as per preliminary estimates, about ₹15.1 crore of GST is suspected to have been evaded during the seven-month period,” said the DGGI.

The officials seized cash transaction private records from company functionaries, which indicated an unaccounted cash credit of more than ₹7.5 crore for a few months in 2018. It involved tax up to ₹2.1 crore. The DGGI also seized ₹52.39 lakh in unaccounted cash.

As the tax evasion detected is over ₹5 Crore, it is a cognisable and non-bailable offence. The DGGI identified two company directors as organisers and financial beneficiaries. One of them was arrested on August 12. The other one did not turn up despite three summonses. He initially produced a medical opinion regarding coronavirus (COVID-19) symptoms and then absconded.