The managing partner of a major fireworks manufacturing group of companies in Sivakasi was arrested for evasion of goods and services tax (GST) and excise duty to the tune of about Rs 22.52 crore over five years.
The arrest was made by officials from the directorate general of goods and services tax intelligence (DGGI), Madurai regional unit of Coimbatore zonal unit, following recovery of incriminating evidence for suppression of value and collection 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 about the evasion. In the first phase, they searched the company last October and collected evidence 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.”
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 the premises of the fireworks maker – 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 admitted to the offence. Not naming him, officials said he was the mastermind and managed the illegal transaction in cash and other modes. He was remanded in judicial custody for 14 days.