GST Intelligence Underlines Tax Evasion Cases in Wood Business, Conducts Raid at Many Places

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GST implementation has completed 2 years in July, during which industry and trade did witness many ups and downs. From 28 to 18 % , e - way bill, composition slabs, GST return issues and other changes has kept the economy curious and puzzled from some time. Now when GST is slowly settling down, the government focus is shifting to its stricter compliance and identifying tax evasion prone sectors and is bringing them to rule book.

The wood based industry and trade is one of the sectors which is said to be on radar of GST department where they are looking for increasing the tax revenue. Steel, Tiles and Stones, Jewellery, Wood, Kirana and Commodity items, Gutkha - Masala are the few areas where tightness is happening by identifying the pockets and increasing the compliance pressure.

After two years, the Government department is said to be ready with data and figures where they are able to find gaps and misses. To curb the tax evasion and input credit frauds in GST regime, the Directorate General of GST Intelligence (DGGI) has started taking strict action against found culprits. Department officials say that they received many cases related to input credit frauds, where the persons generated bogus invoices through companies that existed on papers for availing input tax credit. The goods were not issued by the firms and such cases are being tracked with GST portal data's, software and other internal mechanisms of the department.

The Ply Reporter correspondents spoke to traders and people where GST raids have been conducted. It is learnt that officials are aware of every purchase actual value through their intelligence network and are not listening to reasons offered by traders because of entire material movement chain right from the origin. There have been massive raid with above 50 officials in Mumbai, Patna, Nagpur, Pune, Bangalore where traders were informed not asked about the actual value and handed over a penalty value for the found goods and bills. The Plywood people had to pay the dues according to GST officials then and there above tune of 50 lacs plus. The harassment of 3 to 5 days questioning and explanation did impact the people after which majority are taking oaths of not considering even 10 percent lesser value.

Recently DGGI put raid in Jaipur at Industrial area of Kaladera, Ringus and VKI. The Kaladera based Pancham Plywood Industries offered the GST revenue details according to GST officials demand. The other plywood manufacturing plant located at Ringus namely Tirupati

Plywood Industries, explained their cost, price and stocks where GST officials prepared their report. The VKI based Premier Plylam, one of the largest wood panel distributors of Rajasthan too had been under check of tax officials in their premises. The officials counted entire stock of their warehouse, searched computers and prepared the reports based on the findings.

Talking to Mr Ashish Gupta of Premier Plylam the Ply Reporter learnt that 'GST department is doing every effort to identify the defaulters and putting raid on those manufacturers / traders where they are finding anything suspicious. The GST department is clearly prepared with their data and intelligence and in next 1 to 2 years span every manufacturer and dealer will not be left with any way out other than doing business in an organised way. Mr Gupta informed that every transaction at Premier Plylam was perfectly matched with the records thanks to their dealing with organised companies and branded segment. Mr Ashish Gupta expressed that 'wood timber trade' is high on agenda of the GST department and it will be good for all traders and producers' future if they do their working in books and in an organised manner. 'What is the fun at work if one is having

GST officials say that they found many such cases in wood and wood related trade as well and in all these cases, modus operandi is almost same. First, fake invoices were issued for sale and purchase that never happened on ground. Misuse of input tax credit is a serious concern for tax authorities as it seems to have created a hole in the system that the enforcement agencies are struggling to fix. Initially the officials are verifying all transitional credit claims for more than Rs 1 crore.

Reports from plywood and wood panel trade suggest that GST official squad team are randomly checking plywood and laminate loaded lorries in many places at Gujarat, Rajasthan, Maharashtra, Kerala etc. There have been cases of lorries being seized and penalized for being underbilled. The GST intelligence team is also conducting raids and survey to plywood manufacturers and traders at various places.

It is also to be noted that ‘what organized plywood and panel industries thought of GST impact on unorganized sector, did not happen as expected. Benefits of the new tax regime which was supposed the industries are yielding result but slowly, and in bits and pieces.

A sector where unorganized and small units had 80 % of the market share before GST and rest of 20 % organized largely held by two listed companies Century Plyboards and Greenply Industries is bound to take a turn in next two years with strict compliance and departmental alertness.

The GST is expected to bring support to moderate sized players in paying more taxes while forcing the smaller ones above exemption limits for GST to close down. The raids by DGGI are setting an example from which all leading players must learn that sooner or later underbilling and fake invoicing will be too risky to carry on.

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