Firms face I-T heat over GST evasion charges; L&T, Zee offices 'surveyed'

About two dozen Mumbai-based companies and businesses have come under the scanner of tax officials for possible violations of provisions related to goods and services tax (GST) and alleged tax evasion through fake bills in the past two financial years. This resulted in a “survey action”, initiated by the Income-Tax (I-T) department along with a GST team, on Monday against two major business groups —construction major Larsen & Turbo (L&T) and Essel Group’s Zee Entertainment. 

The crackdown is part of coordinated action against thousands of entities identified by the Directorate General of GST Intelligence, which recently shared the information with the I-T department. 

A senior tax official aware of the development told Business Standard that after scrutinising the information from various sources and agencies, surveys were conducted at 15 premises of Zee Entertainment in Mumbai and Delhi and also at the offices of L&T in Mumbai under Section 133 A of the I-T Act. 

In a statement, Zee said, “Officials of the tax department visited the offices of the company with certain queries and the officers concerned provided all the information. We are extending complete co-operation.” 

L&T didn’t comment till the time of going to press. 

“The database by the GST department featured at least 5,000 entities and companies which have been misusing the GST structure to gain illicit income. The list also comprises companies in different states,” said the tax official cited above. In the coming weeks, six to seven more business houses are likely to be surveyed. In some cases, searches will be also conducted, the official indicated.   

According to sources, companies based in cities including Hyderabad, Delhi, Pune, and Bengaluru will also be covered in this nationwide crackdown. Even some e-commerce players are part of the list provided by the GST department which too will face scrutiny, another person said. 

The CBIC and the I-T departments have been working closely for the past two months following the finance ministry’s directions. Sources said authorities were examining multiple issues, which included fake bills, non-payment of tax on amount recovered through debit notes, excess claim of input tax credits, and transactions with dubious firms to claim credit.

There was no estimate of violations involved. However, it will bolster the customs department’s revenues which collected Rs 16,000 crore in December. 

In an interview to Business Standard, Finance Secretary Ajay Bhushan Pandey acknowledged that there were companies which were trying to misuse the system. 

“The government has full set of data available from the I-T, Customs and then GST. We have been doing complete data analytics using artificial intelligence tools. Hence, we are now able to identify those who have severe mismatches not only within GST but also compared to what they have disclosed in the Customs or the I-T returns and we are going up to them,” he had said.