In a first of its kind search and seizure operation that involved digital tracking, forensic audit and electronic surveillance, the Uttarakhand State GST Department unearthed an organized racket of dubious traders in Jaspur area of Udham Singh Nagar district on March 4, 2023.
They floated several fake firms to give legal cover to illegitimate sale-purchase of timber and its products and caused a tax evasion worth crores of rupees.
The department pressed into service 27 teams with over 300 officers which included forensic and financial technology experts who raided 27 commercial establishments, residences, transporters, advocates and chartered accountants.
The investigators, who have been tracking the illegal network of these activities for the past nine months, believe that since the Good and Service Tax was implemented in India in 2017, some people initially worked out a plan to evade the new tax system and provide legal cover to raw materials procured from the black market.
The investigators suspect involvement of bank officials in opening up of dubious accounts without proper KYC process.
Speaking to PTI, Ranveer Singh, Joint Commissioner, Special Investigation Bureau, said, “The modus operandi was first to float fake firms which worked on paper only. Companies dealing in timber were sourcing raw materials from the gray market and using these fake firms as their genuine suppliers by getting purchase orders and bills from them. They paid input tax credit to these fake firms which caused a huge loss to the government.”
Udham Singh Nagar district is considered one of the biggest timber markets in the country and timber and its products are supplied to all over the country from here. Investigators suspect the involvement of various other people from other states such as Uttar Pradesh, Maharashtra, Haryan, Madhya Pradesh among others.
“During the initial investigation, it was found that a syndicate was involved in creating fake firms by misusing the documents of others and allegedly causing huge loss of revenue,” Singh said.
He added, “The nexus was involved in passing on fake input tax credit on the basis of paper trading by generating fake invoices and without actual supply of goods to Bijnor, Rampur, Moradabad, Saharanpur of UP and Yamunanagar in Haryana.”
Prima facie, the turnover involved is estimated to be over 100 crores with evasion of over 18 crore rupees of tax.
Considering the spread of the illegal network to far off places and involvement of people from multiple professional fields, the department involved digital and forensic experts who normally assist the country’s premier investigating agencies such as the Central Bureau of Investigation and the Enforcement Directorate.
“The search and seizure operation started at 11 am on March 4 and continued till late night. Teams have seized substantial amounts of documents, electronic devices like mobile phones, laptops, tablets, stamps, bill books, ATM/Debit/ Credit Cards, cheque books, signed blank cheques etc that were found during the search operation,” Rajneesh Yashwasthi, Deputy Commissioner, Special Investigation Bureau, said.
He added, “Under the new initiative that our department has taken, we sought help from forensic experts to verify the data seized from the electronic devices. Seven lakh rupees cash were also seized during the operation. Firms and unregistered places of business that were found locked have been sealed with the help of the district administration. Seizure, evidence gathering and recording of statements continued till 9 pm.”
The district administration, local police along with forest and electricity department extended their full cooperation to the operation which was launched under the directions of Commissioner Tax, Uttarakhand Dr Ahmed Iqubal and led on ground by Addl Commissioner Kumaon B S Nagnyal.