Putting a leash: Govt likely to disband unit tracking pre-GST evasion

DGGI expects to complete investigation in all such cases by March

A dedicated unit of tax sleuths tracking cases of evasion in the pre-goods and services tax (GST) era may cease to exist from financial year 2025-26 (FY26).
 

The Directorate General of GST Intelligence (DGGI) is likely to complete investigation in all tax evasion cases predating the GST regime by the end of this financial year, according to a senior government official. These cases pertain to the erstwhile service tax and central excise duties.
 

“Less than 50-60 cases remain to be investigated (and investigation in these cases will be completed) most likely by March-end. After that, we will disband a dedicated unit which was established for that purpose (probing pre-GST cases) very soon,” the official said.
 

Before July 2017, the DGGI operated as the Directorate General of Central Excise Intelligence (DGCEI) as the primary intelligence arm of the Central Board of Indirect Taxes and Customs (CBIC). The DGCEI was responsible for gathering, organising, and sharing intelligence related to evasion of central excise and service tax across the country.
 

Over the last year, nearly 300 tax evasion cases have been investigated, with the total value exceeding Rs 5,000 crore. Sources indicate that recoveries from these cases have amounted to several hundred crores. The investigations conducted over the past year primarily focused on the power, automobile, and infrastructure sectors.
 

An email sent to the finance ministry remained unanswered until the time of going to press.
 

Another official noted that certain cases involve tax evasion up to Rs 500 crore. “Recoveries will occur in the coming months, and some cases are still pending in the courts,” he said.
 

GST, which was formulated with the ambitious ideology of ‘One Nation, One Tax’  is an indirect tax which has subsumed most indirect taxes in India such as excise, service tax and value added tax (VAT).
 

The DGGI identified 6,084 GST evasion cases in financial year 2023-24 (FY24), totaling Rs 2.01 trillion — twice the amount found in the previous financial year. The report highlights that the online gaming and BFSI (banking, financial services and insurance) sectors are particularly vulnerable to tax evasion. In FY24, evasion in the “real-money online gaming” sector hit Rs 81,875 crore, while the BFSI sector saw Rs 18,961 crore evasion.
 

“Section 79 of the CGST Act empowers the authorities to initiate proceedings for recovery of tax dues through various modes apart from execution of court orders and decrees by attachment of goods and properties. Other conventional modes include recovery through Land Revenue Authority, recovery from surety, provisional attachment of property till dues are paid,” said Jasmine Damkewala, senior partner at law firm Circle of Counsels and Advocate-on-Record, Supreme Court.