The Uttarakhand GST Department has arrested a man for alleged tax evasion of more than Rs 18 crore on a Rs 100-crore turnover by creating several fake firms in collusion with other people, officials said on Monday.
Shahnawaz Hussain was absconding since March 4, 2023, when the department launched an intensive search and seizure operation to unearth the racket in the Jaspur area of Udham Singh Nagar district in Uttarakhand, they said. He was arrested on Sunday.
The investigation went on for almost a year on the directions of Commissioner Tax, Uttarakhand, Dr Ahmed Iqbal, and under the leadership of Additional Commissioner, Kumaon, Rakesh Verma, and supervision of Joint Commissioner Ranveer Singh. It used drones, advanced digital tracking and analysis software like FALKAN, Artificial Superintelligence (ASI), and electronic surveillance, officials said.
“We have recovered around Rs 15 crore till now, out of which, Rs 2.5 crore is in cash and Rs 12.3 crore is IGST outflow. Enforcement action has been taken on the vehicles carrying bills of the fake supplier,” an official, who was part of the investigation team, said.
“We have cancelled the registration of more than 90 firms in state jurisdictions alone and 300 bank accounts have been frozen. More arrests will take place in coming days and strict action shall be taken against those involved in tax evasion cases,” he added.
The probe found that a group of traders floated fake firms to give legal cover to their illegal trade of timber and its products and evade GST worth crores of rupees in Udham Singh Nagar — one of the biggest timber markets from where timber products are supplied across the country, officials said.
The investigators suspected the involvement of people from other states such as Uttar Pradesh, Haryana, Delhi, Bihar, and Rajasthan, they said.
The operation involved 27 teams with more than 300 tax and forensic officials and financial technology experts and they raided 27 commercial establishments and residences of transporters, advocates, and chartered accountants, officials said.
The investigators, who had been tracking these illegal networks for the past nine months, found multiple firms in the name of a single person with the sole purpose of defrauding the tax authorities, they said.
The accused had worked out a plan to cheat the GST regime, since its implementation in 2017, by providing legal cover to the fake companies to show procurement of raw materials from the black market.
The investigators suspect the involvement of bank officials in helping them with opening accounts without a proper KYC process. The network involved 25 to 30 key people working in collusion with each other, officials said.
The tax investigation team also sought help from forensic experts to verify the data seized from the electronic devices. Firms and unregistered places of business that were found locked were sealed with the help of the district administration.