GST Evasion: DGGI Recovers Rs 74.86 Crore From Tobacco Manufacturer

The Directorate General of GST Intelligence (DGGI) has recovered Rs 74.86 crore from a prominent tobacco producer in Maharashtra's Ahmednagar district as part of a crackdown on large-scale tax evasion.

Unmanufactured tobacco is subject to the highest GST limit, which is nearly equal to the value of the products, and there is potential for widespread evasion in this market. Unmanufactured Tobacco is subject to a 28 percent GST plus a 71 percent Compensation Cess.

During the lockdown time in April 2021, a prominent Sanganer-based party cracked down on large-scale GST evasion and covert clearances of unmanufactured tobacco, resulting in the highest cash recovery of Rs 74.86 crores in a single event.

Several incriminating documents and computerised records were confiscated during the searches, and on-the-spot investigation showed that the parent company had cleared vast amounts of unmanufactured tobacco, both processed and sold, without paying GST.

Further data analysis showed that the parent entity was evading the GST payable by the parent entity (5 percent GST) on tobacco leaves procured directly from agriculturists from which Unmanufactured Tobacco was produced. The brand is well-known throughout India, and it is widely consumed not only in Maharashtra but also in other states.

Repeated persuasion by the Officers resulted in cash payments of Rs 74.86 crores in April 2021 to settle their GST liabilities, including part payment of interest, making it one of the largest cash recoveries by a DGGI Formation in India during the Lockdown period.