MADURAI: The managing partner of a major fireworks manufacturing group of companies in Sivakasi was arrested by officials from the Directorate General of Goods and Services Tax Intelligence (DGGI) for evasion of Goods and Services Tax (GST) and excise duty to the tune of approximately Rs 22.52 crore over a period of five years.
The arrest was following recovery of incriminating evidences for suppression of value and collection of amount by way of cash through conduits located around Madurai.
DGGI sources told TOI that search on the company’s premises were conducted in two phases based on a tip-off about the evasion. In the first phase, they searched the company in October last year and they collected evidences and seized Rs 1.82 crore in cash.
Earlier, investigation indicated that the “fireworks manufacturing firms had indulged in undervaluation and cleared/supplied their final products by issuing improper/invalid invoices by declaring arbitrary suppressed values as transaction value in contravention of the provisions of Section 4 of the Central Excise Act 1944 and Section 15 of the Central GST Act, 2017.”
They collected a differential/suppressed value based on the invoices through electronic transaction in their bank accounts and the rest in cash from their dealers/customers. They were engaged in a ‘local hawala’ for collecting undervalued amount from the dealers (in Indian rupees) through their agents using specific codes / tokens and handed over the cash to the manufacturer.
On Tuesday, the DGGI team conducted a follow up search on six premises of the fireworks manufacturer – four in Madurai and two in Sivakasi – and collected more supporting documents that revealed that the company had evaded excise duty to the tune of approximately Rs 2.52 crore from April 2016 to June 2017.
This is in addition to more than Rs 20 crore GST evaded by the group of companies on supply of fireworks from July 2017 to October 2020. These offences are non-bailable. One of the three partners of the company involved in the day-to-day affairs of the company admitted to the offence in collusion with his other partners, employees, sales representatives and commission agents.
Not naming him, officials said he was the mastermind and managed the entire network of illegal transaction in cash and other modes. He was remanded in judicial custody for 14 days. Officials said such evasion is punishable with an imprisonment of a term that may extend to seven years with fine.