News Analysis India

Tag: Tax Evasion

  • GST Council agrees to decriminalise certain offences; no tax increase on any item

    By PTI

    NEW DELHI:  The GST Council on Saturday agreed to decriminalise certain offences and doubled the threshold for launching prosecution under the tax law to Rs 2 crore, but retained the limit at Rs 1 crore for fake invoicing.

    The Council also clarified the definition of SUVs (sports utility vehicles) for the levy of a 22 per cent compensation cess and decided to come out with parameters to define MUVs (multi-utility vehicles).

    Briefing reporters after the 48th GST Council meeting, Finance Minister Nirmala Sitharaman said the Council could decide on only 8 out of the 15 agenda items due to paucity of time, but added that no new taxes have been brought in.

    The agenda items which could not be considered included taxation for pan masala and gutkha firms and a report by a Group of Ministers (GoM) on setting up of appellate tribunals.

    The report of another GoM, chaired by Meghalaya Chief Minister Conrad Sangma, on GST levy on online gaming, casinos and horse racing was also not part of the agenda for Saturday’s meeting.

    Along with the FM, Union Minister of State for Finance Shri @mppchaudhary, besides Finance Ministers of States & UTs (with legislature) and Senior officers from Union Government & States are also attending the meeting. (2/2)
    — Ministry of Finance (@FinMinIndia) December 17, 2022

    Sitharaman said in the case of SUVs, the clarification that has been given is that the higher rate of compensation cess of 22 per cent is applicable to a motor vehicle fulfilling all four conditions — it is popularly known as SUV; has engine capacity exceeding 1,500cc; length exceeding 4,000 mm; has a ground clearance of 170 mm and above.

    “So this clarification is not a new tax, it’s more to say what defines that commodity which is under taxation as SUV,” the minister said.

    Sitharaman said the discussion on MUVs began when some states asked whether sedans should be included in the SUV category. The states also suggested bringing in a definition for MUVs.

    The minister said the Council decided that if any other motor vehicle categories need to be added to the 22 per cent cess, the panel of central and state tax officers (or the Fitment Committee) will look into it.

    The Centre and states would attempt to widen the GST base at every level to increase the tax mop-up which is averaging about Rs 1.4 lakh crore every month. “So the focus will be on how much all of us are putting effort…to widen the tax base,” she said.

    Currently, 1.40 crore taxpayers are registered under GST.

    Revenue Secretary Sanjay Malhotra said the Council took a “path-breaking decision” with regard to decriminalising three types of GST offences — obstruction or preventing any officer in the discharge of his duties; deliberate tampering of material evidence; and failure to supply information.

    ALSO READ | Decriminalise GST law, slash personal income tax rates in Budget: CII to govt

    The minimum threshold of tax amount for launching prosecution under GST has been raised from Rs 1 crore to Rs 2 crore, except for the offence of issuance of invoices without the supply of goods or services or both.

    Also, the compounding amount has been reduced to the range of 25 to 100 per cent, from the present 50 to 150 per cent of the tax amount.

    Central Board of Indirect Taxes and Customs (CBIC) Chairman Vivek Johri said currently under the GST law offences exceeding Rs 1 crore are considered for criminal prosecution.

    “What was proposed in Council and what came out of the discussion was that the limit would be enhanced from Rs 1 crore to Rs 2 crore now. So cases involving tax amounts of up to Rs 2 crore will go out of the purview of criminal action, except cases of fake invoicing,” Johri said.

    He said the current threshold of Rs 1 crore for launching criminal prosecution will continue in fake invoicing cases which continue despite many measures taken by the tax authorities.

    The Centre had in September issued directions to Central GST officers to launch prosecution in offences exceeding Rs 5 crore. That direction was given through a circular, but the GST law currently sets the limit at Rs 1 crore.

    Malhotra said the amendments in GST law to give effect to the Council’s decision on decriminalisation of GST offences would be brought in the Finance Bill, 2023.

    After that, the state legislatures too would have to pass the amendments and pave the way for making the changes effective.

    The GST Council also decided to lower tax rates on the husk of pulses to nil from 5 per cent.

    Tax on ethyl alcohol supplied to refineries for blending with motor spirit (petrol) was reduced to 5 per cent, from 18 per cent.

    These changes in GST rates were aimed at the “facilitation of trade and measures for streamlining compliances in GST,” as per an official statement.

    The Council also clarified that Rab (a type of jaggery) and fryums manufactured using the process of extrusion attract 18 per cent GST.

    NEW DELHI:  The GST Council on Saturday agreed to decriminalise certain offences and doubled the threshold for launching prosecution under the tax law to Rs 2 crore, but retained the limit at Rs 1 crore for fake invoicing.

    The Council also clarified the definition of SUVs (sports utility vehicles) for the levy of a 22 per cent compensation cess and decided to come out with parameters to define MUVs (multi-utility vehicles).

    Briefing reporters after the 48th GST Council meeting, Finance Minister Nirmala Sitharaman said the Council could decide on only 8 out of the 15 agenda items due to paucity of time, but added that no new taxes have been brought in.

    The agenda items which could not be considered included taxation for pan masala and gutkha firms and a report by a Group of Ministers (GoM) on setting up of appellate tribunals.

    The report of another GoM, chaired by Meghalaya Chief Minister Conrad Sangma, on GST levy on online gaming, casinos and horse racing was also not part of the agenda for Saturday’s meeting.

    Along with the FM, Union Minister of State for Finance Shri @mppchaudhary, besides Finance Ministers of States & UTs (with legislature) and Senior officers from Union Government & States are also attending the meeting. (2/2)
    — Ministry of Finance (@FinMinIndia) December 17, 2022

    Sitharaman said in the case of SUVs, the clarification that has been given is that the higher rate of compensation cess of 22 per cent is applicable to a motor vehicle fulfilling all four conditions — it is popularly known as SUV; has engine capacity exceeding 1,500cc; length exceeding 4,000 mm; has a ground clearance of 170 mm and above.

    “So this clarification is not a new tax, it’s more to say what defines that commodity which is under taxation as SUV,” the minister said.

    Sitharaman said the discussion on MUVs began when some states asked whether sedans should be included in the SUV category. The states also suggested bringing in a definition for MUVs.

    The minister said the Council decided that if any other motor vehicle categories need to be added to the 22 per cent cess, the panel of central and state tax officers (or the Fitment Committee) will look into it.

    The Centre and states would attempt to widen the GST base at every level to increase the tax mop-up which is averaging about Rs 1.4 lakh crore every month. “So the focus will be on how much all of us are putting effort…to widen the tax base,” she said.

    Currently, 1.40 crore taxpayers are registered under GST.

    Revenue Secretary Sanjay Malhotra said the Council took a “path-breaking decision” with regard to decriminalising three types of GST offences — obstruction or preventing any officer in the discharge of his duties; deliberate tampering of material evidence; and failure to supply information.

    ALSO READ | Decriminalise GST law, slash personal income tax rates in Budget: CII to govt

    The minimum threshold of tax amount for launching prosecution under GST has been raised from Rs 1 crore to Rs 2 crore, except for the offence of issuance of invoices without the supply of goods or services or both.

    Also, the compounding amount has been reduced to the range of 25 to 100 per cent, from the present 50 to 150 per cent of the tax amount.

    Central Board of Indirect Taxes and Customs (CBIC) Chairman Vivek Johri said currently under the GST law offences exceeding Rs 1 crore are considered for criminal prosecution.

    “What was proposed in Council and what came out of the discussion was that the limit would be enhanced from Rs 1 crore to Rs 2 crore now. So cases involving tax amounts of up to Rs 2 crore will go out of the purview of criminal action, except cases of fake invoicing,” Johri said.

    He said the current threshold of Rs 1 crore for launching criminal prosecution will continue in fake invoicing cases which continue despite many measures taken by the tax authorities.

    The Centre had in September issued directions to Central GST officers to launch prosecution in offences exceeding Rs 5 crore. That direction was given through a circular, but the GST law currently sets the limit at Rs 1 crore.

    Malhotra said the amendments in GST law to give effect to the Council’s decision on decriminalisation of GST offences would be brought in the Finance Bill, 2023.

    After that, the state legislatures too would have to pass the amendments and pave the way for making the changes effective.

    The GST Council also decided to lower tax rates on the husk of pulses to nil from 5 per cent.

    Tax on ethyl alcohol supplied to refineries for blending with motor spirit (petrol) was reduced to 5 per cent, from 18 per cent.

    These changes in GST rates were aimed at the “facilitation of trade and measures for streamlining compliances in GST,” as per an official statement.

    The Council also clarified that Rab (a type of jaggery) and fryums manufactured using the process of extrusion attract 18 per cent GST.

  • DGGI denies reports of UP businessman Piyush Jain having paid Rs 52 cr as tax liability from seized cash

    Express News Service

    LUCKNOW: Amid charges and counter-charges by the political parties and the reports over the seizure of huge amounts of cash stashed on the Kanpur and Kannuaj premises of businessman Piyush Jain during the last couple of days, the Directorate General of GST Intelligence (DGGI) issued a clarification saying that the total amount of cash in the ongoing case recovered was kept as case property in the safe custody of the State Bank of India pending further investigations and the business had not made the payment of Rs 52 crore as penalty.

    Earlier, there were reports that the DGGI had considered Rs 177.45 crore recovered from the Kanpur premises of the businessman as the turnover of his earnings and had levied a penalty of Rs 52 crore on him for tax evasion. The reports in sections of media had also claimed that the businessman had made the payment of R 52 crore as a penalty and now to secure a bail would be easier for him.

    Currently, Jain is lodged in Kanpur district jail on a 14-day remand. He was arrested under Section 67 of the CGST Act on December 26 and was sent to jail by the court under Section 132 of the CGST Act. A case of tax evasion of over Rs 31 crore was registered against him.

    However, clearing the air on Thursday over the recovery and also in the context of ongoing investigations into M/s Odochem Industries, Kannauj, owned by Jain, the DGGI’s release said that a total cash of Rs 197.49 crore, 23 kg of gold, and offending goods of high value were recovered from two premises owned by Jain. 

    “The reports with regard to the DGGI deciding to treat the cash recovered as the turnover of the manufacturing unit and proposes to proceed accordingly are purely speculative,” said the release. It added that reports had also wrongfully stated that after admitting his liability, Piyush Jain had, with the approval of DGGI, deposited a total amount of Rs 52 crore as tax dues.

    “It is made out as if the department has agreed with the deposition of Shri Piyush Jain and finalised the tax liability accordingly. These reports are purely speculative, without any basis and seek to undermine the integrity of the ongoing investigations which are being carried out in a most professional manner based on specific intelligence against the party,” said the release.

    It further said that no deposit of tax dues was made by M/s Odochem Industries from the seized money to discharge their tax liabilities which were yet to be determined. “Further, the voluntary submissions made by Shri Piyush Jain are a subject matter of ongoing investigations and any view on the source of cash seized by the department and the exact tax liabilities of M/s Odochem Industries or other parties involved in the investigation shall be taken on the basis of appraisal of evidence collected from various premises during the searches and the outcome of further investigations,” the release added.

  • Dainik Bhaskar, Bharat Samachar evaded tax on income of Rs 900 crore, hints IT department

    By Express News Service
    NEW DELHI: In an oblique reference to its searches conducted at the offices of media houses Dainik Bhaskar and Bharat Samachar, the Income Tax Department has alleged tax evasion of Rs 900 crore was discovered during the raids on Thursday.

    In two separate statements issued on Saturday, although no names were mentioned, there were hints to suggest the IT department was mentioning searches in the office of Dainik Bhaskar and Bharat Samachar, which attracted huge criticism. These two media houses in their reporting were critical of the way the government had handled the second wave of Covid-19.  

    The first statement of the department spoke of the raids on a prominent business group, involved in businesses in various sectors, including media, power, textiles and real estate, with a group turnover of more than Rs 6,000 crore per annum. 

    “The group has more than 100 companies including the holding and subsidiary companies. During the search, it was found that they have been operating several companies in the names of their employees, which have been used for booking bogus expenses and routing of funds,” the statement said.

    “The quantum of income escapement using this modus operandi, detected so far, amounts to Rs 700 crore spread over a period of 6 years. However, the quantum may be more as the group has used multiple layers and investigations are being carried out to unravel the entire money trail,” the department said in the first statement that seemed centered on the raids on Dainik Bhaskar Group. 

    “The listed media company does barter deals for advertisement revenues, whereby immovable properties are received in lieu of actual payments. Shreds of evidence have been found indicating cash receipts in respect of the subsequent sale of such properties. This is under further examination,” the IT department added, without taking names. 

    ALSO READ | Income department raids multiple premises of media group Dainik Bhaskar

    It is to be mentioned here that DB Corp, a listed company, owns Dainik Bhaskar. 

    The tax department also said that it detected cyclical trading and transfer of funds among group companies engaged in unrelated businesses to the tune of Rs. 2,200 crore. 

    In a separate statement, it said that it conducted a search operation on July 22 on a group in Uttar Pradesh dealing in mining, hospitality, news media, liquor, and real estate.  

    Confirming the search in Lucknow, Basti, Varanasi, Jaunpur, and Kolkata, office, it claimed that “Cash of more than Rs 3 crore has been seized and 16 lockers have been placed under restraint.”  

    “Documents including incriminating digital evidence indicating nearly Rs 200 crore of unaccounted transactions have been seized,” the department said in a statement. 

    It has also accused the company of money laundering and tax evasion. 

    “Evidence found during searches establishes that the group has been earning huge outside-the-books income through mining, processing, and sales in liquor, flour business, real estate, etc. Unaccounted income emanating out of these transactions has been found exceeding Rs. 90 crore as per preliminary estimates.

    “This income has been brought back into the books through a network of shell companies and other bogus entities without paying any taxes, thereby creating a charade that the money has been accounted for,” the statement said.

  • Dainik Bhaskar, Bharat Samachar evaded tax to tune of Rs 900 crore, hints IT department

    By Express News Service
    NEW DELHI: In an oblique reference to its searches conducted at the offices of media houses Dainik Bhaskar and Bharat Samachar, Income Tax Department has alleged tax evasion of Rs 900 crore was discovered during the search operation on Thursday. 

    In two separate statements issued on Saturday, although no names were mentioned, there were hints to suggest the IT department searches in the office of Dainik Bhaskar and Bharat Samachar, which attracted huge criticism. These two media houses in their reporting were critical of the way the government had handled the second wave of Covid-19.  

    “The quantum of income escapement using this modus operandi, detected so far, amounts to Rs 700 crore spread over a period of 6 years. However, the quantum may be more as the group has used multiple layers and investigations are being carried out to unravel the entire money trail,” the department said, in a first statement. 

    The statement mentioned searches at 20 residential and 12 business premises spread over 9 cities including Mumbai, Delhi, Bhopal, Indore, Noida, and Ahmedabad. 

    ALSO READ | Income department raids multiple premises of media group Dainik Bhaskar

    “The listed media company does barter deals for advertisement revenues, whereby immovable properties are received in lieu of actual payments. Shreds of evidence have been found indicating cash receipts in respect of the subsequent sale of such properties. This is under further examination,” the IT department said, without taking names. 

    It is to be mentioned here that DB Corp, a listed company, owns Dainik Bhaskar. 

    The tax department also said that it detected cyclical trading and transfer of funds among group companies engaged in unrelated businesses to the tune of Rs. 2,200 crore has been found. 

    In a separate statement, it said that it conducted a search operation on July 22 on a group in Uttar Pradesh dealing in Mining, Hospitality, News Media, Liquor, and Real Estate.  

    Confirming the search in Lucknow, Basti, Varanasi, Jaunpur, and Kolkata, office, it claimed that “Cash of more than Rs 3 crore has been seized and 16 lockers have been placed under restraint”.  

    “Documents including incriminating digital evidence indicating nearly Rs 200 crore of unaccounted transactions have been seized,” the department said in a statement. 

    It has also accused the company of money laundering and tax evasion. 

    “Evidence found during searches establishes that the group has been earning huge outside-the-books income through mining, processing, and sales in liquor, flour business, real estate, etc. Unaccounted income emanating out of these transactions has been found exceeding Rs. 90 crore as per preliminary estimates.

    “This income has been brought back into the books through a network of shell companies and other bogus entities without paying any taxes, thereby creating a charade that the money has been accounted for,” the statement said.

  • Ludhiana firm raided on suspicion of tax evasion

    By PTI
    LUDHIANA: A team of the Punjab State GST department on Saturday carried out a search operation at the premises of a trader here and recovered cash of over Rs 80 lakh from him, an official said.

    The official said it is suspected that the trader, who engaged in the trade of edible and non-edible oil, was evading tax.

    The team also seized account books from the premises.

    Tejveer Singh Sidhu, Deputy Excise and Taxation Commissioner, Ludhiana, said, “The record impounded is being examined for ascertaining the actual amount of evasion involved and further investigation is in progress.”