Shadow supply chain and missing E-way bills: How this pan masala manufacturer evaded GST

Gurgaon: A firm manufacturing pan masala and tobacco products for prominent brands allegedly evaded tax up to Rs 5 crore by running a shadow supply chain that operated out of illegal warehouses along the Delhi-Faridabad border.Officials of the Central GST office said the firm transported finished products from its registered manufacturing unit in Delhi to illegal warehouses in Faridabad. From these sites, goods were transported across Delhi-NCR by truckers without any E-way bills.An ‘E-way bill' is a mandatory GST document that is to be carried by whosoever is transporting a good or delivering a service. Since there was no official record of these goods, the company bypassed any tax obligations on them. A CGST Faridabad official told TOI on Monday that they received intelligence about the fraud, and on June 7 and 8, they conducted simultaneous raids at five spots. This included four unregistered properties linked to the firm in Faridabad, and an official facility in Delhi. "The four warehouses were storing unaccounted goods of major brands such as Shikhar, Tansen, Kamla Pasand, Swagat Gold, SS One, Hans and Double Black. Searches were carried out at the Delhi facility of the company, where we found a stock mismatch of goods too," the official said.He added that the raids were carried out in coordination with the CGST Delhi (East) unit as one of the facilities was under its jurisdiction. After the raids, a CGST team intercepted a truck in Faridabad, close to the border, and uncovered 6.3 lakh packets of pan masala valued at Rs 25 lakh. The trucker did not possess any E-way bill. The official said that unregistered warehouses were close to the Delhi border to make it convenient to divert unaccounted goods from the main facility in the capital."This case highlights growing sophistication in tax evasion schemes and efficacy of data analytics in detecting such frauds," the joint commissioner of CGST Faridabad said.He added that the department is investigating and will initiate legal proceedings against the manufacturer. The company could not be reached for comment till Monday night. This isn't the first time that the firm has come under CGST scanner.Last year, CGST teams raided two of the company's facilities in Uttar Pradesh's Sahibabad and Bulandshahr industrial areas for alleged tax evasion. At the time, officials had estimated GST evasion of Rs 1.8 crore. Then too, the firm manufacturing pan masala and tobacco products for prominent brands had allegedly stored unaccounted goods.