According to officials, a gang of merchants who would set up fictitious companies to provide a legal cover for their unlawful trade in timber and related products and escape Goods and Services Tax (GST) amounting to crores of rupees have been caught by Uttarakhand tax authorities using digital tracking and electronic surveillance.
According to them, the Uttarakhand GST department began a massive search and seizure operation called “Operation D Day-Rising Woods” to find the scam in the Jaspur neighbourhood of the Udham Singh Nagar district.
One of the largest timber marketplaces in the nation, Udham Singh Nagar provides wood and its products to markets all across the nation.
Investigators believe that residents of other states, including Uttar Pradesh, Haryana, Delhi, Bihar, and Rajasthan, are involved.
Throughout the course of the operation, 27 teams made up of more than 300 tax and forensic authorities as well as specialists in financial technology raided 27 businesses and the homes of transporters, attorneys, and chartered accountants.
The investigators, who have been pursuing these criminal networks for the past nine months, discovered many businesses registered in one person’s name that was created with the express intent of deceiving the tax authorities.
They contend that since the GST Collection regime’s inception in 2017, the defendants have been working on a scheme to defraud it by giving fictitious businesses legal protection so they may claim to have bought raw materials on the black market.
Investigators believe that bank employees may have assisted the suspects in creating accounts without following the necessary KYC procedure. According to authorities, the network consisted of 25 to 30 influential individuals who colluded with one another.
Ranveer Singh, a joint commissioner of the Special Investigation Bureau, stated, “The modus operandi was first to float fake firms which worked on paper only. Companies dealing in timber were sourcing raw materials from the grey market and using these fake firms as their genuine suppliers by getting purchase orders and bills from them. They paid input tax credits (ITC) to these fake firms which caused a huge loss to the government.”
“During the initial investigation, it was found that a syndicate was involved in creating fake firms by misusing the documents of others and allegedly causing huge loss of revenue,” Singh expressed.
He continued by saying that the nexus was responsible for transferring phoney input tax credits to Yamunanagar in Haryana, Bijnor, Rampur, Moradabad, and Saharanpur in Uttar Pradesh by creating phoney invoices without really supplying the items to those locations.
The turnover is initially projected to be above Rs 100 crore, with over Rs 18 crore in tax evasion.
On March 4, the search and seizure operation began at 11 am and went on into the wee hours. According to Rajneesh Yashwasthi, deputy commissioner of the Special Investigation Bureau, teams have seized a sizable number of papers, electronic devices including mobile phones, laptops, and tablets, stamps, bill books, debit and credit cards, chequebooks, and signed blank checks.
“We sought help from forensic experts to verify the data seized from the electronic devices. Rs 7 lakh in cash was also seized during the operation. Firms and unregistered places of business that were found locked have been sealed with the help of the district administration,” he counted.
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According to authorities, the operation was started on the orders of Commissioner Tax for Uttarakhand, Ahmed Iqubal, and was overseen on the ground by Assistant Commissioner for Kumaon, B S Nagnyal.
