Tax evasion in scrap trade under lens as Punjab shifts top GST official

The sudden transfer of the Director (Investigation), GST, Punjab, has again brought into focus the tax evasion scam in the trade of iron and steel scrap in Punjab.

The government has withdrawn the charge of the Director (Investigation), from Jaskaran Singh Brar, Joint Commissioner (Appeals), and given the additional charge to Harsimrat Kaur.

Senior functionaries and officials of the Taxation Department told The Tribune that the transfer was effected as the officer “was on the sensitive post for the past nearly two years”.

“The role of another official posted in the State Intelligence and Preventive Unit (SIPU), posted in Patiala, MP Singh, is also under the scanner . There were complaints… he had let off a person by imposing a minor penalty of Rs 2 lakh after a recovery notice of Rs 4 crore tax was issued in 2022,” said a senior officer, requesting anonymity.

The Punjab Government has now decided that no officer will remain on such sensitive posts in the department for more than a year. The state Taxation Department has identified posts in its investigation wing and SIPU for the purpose.

Interestingly, the transfer was affected the same day DIG Harcharan Singh Bhullar was arrested by the CBI on a complaint of iron scrap dealer Akash Batta, though officials claim there is no direct link between the two incidents. Batta trades in iron and steel scrap in Mandi Gobindgarh.

Official sources told The Tribune that they were also beginning an investigation into tax evasion during the sale and purchase of iron and steel scrap. “Most of the scrap is brought to the 120-odd secondary steel furnace units in Mandi Gobindgarh from outside the state — mainly Delhi, Jaipur and other places in Rajasthan, by traders, who in the local industry parlance are called “passers” for ensuring end-to-end delivery of scrap without paying the GST.

Scrap-laden trucks carry bogus bills, which are destroyed once they reach the destination in Mandi Gobindgarh, where all industrial as well as household scrap is re-melted and then remodelled. The whole process of getting the scrap, without paying the GST, happens in spite of taxation nakas at all entry and exit points in the state, thanks to the nexus between passers, taxation officials and police officials,” an iron and steel trader in Mandi Gobindgarh said.

He said 70 per cent of the scrap that reached Mandi Gobindgarh had bills which could not be tracked back to the seller. Each of the steel furnaces consumes between 50 tonnes to 400 tonnes of scrap per day. The GST of 18 per cent is levied on scrap. When the scrap is traded without paying the GST, the consignor saves 9 per cent and passes on the benefit of 9 per cent to the consignee.

Another prominent steel furnace unit owner said the bills of scrap issued by the consignor could not be tracked for having paid tax. “There is no authentication of bills sent by the seller. We do not know if he has paid the taxes,” he explained.

Meanwhile, officials in the Taxation Department said they had been cracking down on GST evaders and those indulging in bogus billing, and had unearthed a bogus billing scam worth Rs 5,000 crore in recent months. “We have been strengthening our SIPU units and the role of the above mentioned officers is being investigated,” said a senior officer.

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