Tax Evasion : GST Department unearths Rs 500 Crore cash transaction in Surat

Surat : In a recent series of operations conducted by the Goods and Service Tax (GST) department over the last one-and-a-half months, the diamond and textile hub of Surat has been brought under scrutiny. A staggering Rs 500 crore worth of cash transactions involving various businesses, ranging from doctors, tuition classes, auto spare parts, to scrap dealers, have surfaced, raising concerns about tax evasion.

The investigations revealed that service providers across the city are resorting to cash transactions to evade paying their dues to the government exchequer, a move that questions the efficiency of departmental monitoring six years post the implementation of GST.

Preliminary inquiries conducted by officials uncovered that goods are entering the market directly from companies without proper invoicing. Additionally, certain professionals, notably doctors, are found operating without issuing bills for their services. These findings have brought to light a significant lack of control over cash transactions in various business sectors within the city.

During the recent series of search operations encompassing 7 to 8 different commodities, more than 500 crores were discovered in cash transactions. Doctors involved in specialized skin and hair treatments in Gujarat, particularly in Surat, were subjected to raids, leading to the revelation of cash transactions exceeding Rs 100 crores. Similarly, spare parts transactions, which were directly received from companies, disclosed cash dealings amounting to Rs. 50 crore, despite the legitimate supply chain.

The scrutiny extended to traders engaged in the scrap-copper business, where credit up to 100 crores was being maneuvered, leading to the arrest of three individuals involved in the illicit operation.

Even tuition and animation class operators were found operating solely in cash, collecting fees from students without proper documentation, tallying up to over Rs. 20 crore in cash transactions.

While experts acknowledge that GST has notably reduced cash transactions compared to the previous VAT system, certain sectors are still rife with unmonitored cash dealings. Tax consultant Prashant Shah highlighted, “The source of illicit cash transactions is akin to the origination of a river; if manufacturers are selling in cash, it becomes challenging to control. Despite the provision for a 100 percent penalty upon detection of cash transactions, increasing penalties might not yield the desired effect.”