After the GST Mumbai East Commissionerate of Mumbai Zone on Friday detected a GST evasion worth Rs 40.5 crore by the cryptocurrency exchange, WazirX, Zanmai Labs, which manages the crypto firm, said that it has been diligently paying tens of crores worth of GST every month.

“There was an ambiguity in the interpretation of one of the components which led to a different calculation of GST paid. However, we voluntarily paid additional GST in order to be cooperative and compliant. There was and is no intention to evade tax,” Zanmai Labs said in a statement in reply to a query by Business Today.

The Commissionerate had in a release stated that WazirX had evaded taxes in case of transactions in WRX tokens on the platform. The agency, in a statement, said they have recovered Rs 49.20 crore in cash from the company which comprises interest and penalty. The platform has been charging commissions on various cryptocurrency transactions on the platform.

“However, the rate of commission is different for both transactions. The transaction in rupee attracts the commission of 0.2 per cent and the transaction in WRX attracts the commission of 0.1 per cent,” the Commissionerate's release added. During the investigation undertaken by CGST, it was found that WazirX wasn’t paying taxes for commission charged on WRX which commands GST of 18 per cent, as per an official handout.

The authority has said that it is also probing the similar cases of tax evasions by crypto exchanges across Mumbai.

While the issue of huge tax evasion by cryptocurrency exchanges have taken a critical turn, Rajat Mittal, a Supreme Court advocate shared an elaborate thread on Twitter arguing that the GST evasion by crypto exchanges/ corporates is not realistic given the massive investigations by authorities being undertaken from time to time.

“WazirX could have chosen to contest this demand by asking for a show cause notice or they could have paid the tax under protest. But given how cases drag on for years, they settled the matter to avoid prolonged litigation with department. I don’t have full facts, but this could be due to the fact that overtime value of WRX appreciated significantly so department may have taken a higher base for calculation of 18 per cent GST. This could also be a simple case of miscalculation or treatment of WRX as money or not. I feel this issue arose due to lack of regulatory clarity of crypto in India rather than a case of tax fraud,” Mittal said.

Following GST investigation on Wazir X, mainstream media outlets have covered the news as ‘big tax fraud’ by an Indian crypto exchange causing FUD in Indian crypto community. I explain how mainstream media house is making the song and dance of nothing. A thread...🧵

— Rajat Mittal (@Rajatlaw) January 2, 2022

This is not for the first time WazirX has been caught in the regulatory net. Earlier, India’s Enforcement Directorate (ED) had conducted investigations into various claims of money laundering involving WazirX, allegedly involving Chinese nationals.