GST Evasion: Rs. 32 Cr Penalty Levied on Punjab-based Firm

GST Evasion - Taxscan

A Punjab- based Firm, Adarsh Farm Services, Malout, a division of United Phosphorus Limited (UPL) was asked to pay the penalty of Rs 32.28 crore for alleged GST Evasion under the Punjab Goods and Services Tax Act and the Central Goods and Services Tax Act.

Varun Nagpal, State Tax Officer (GST), Muktsar, said, “The company during the course of its business had received supply of some boom spray machines at Malout and delivered at Om Beej Bhandar, Malout. It came to our knowledge that the company was supplying the agro formulations (pesticides) manufactured by it directly to farmers against the consideration of Rs 90 per acre for the machine, but in the shield of providing the agriculture services, claiming it as exempt services and thus escaping the payment of taxes due under the PGST Act and the CGST Act.”

He said, “The modus operandi being adopted by the company is that a farmer purchases agro formulations from the dealer in the area and then dealer arranges spray machine. The product price is charged by the dealer who had, in turn, purchased it from the manufacturer. The machine is nothing but an equipment to deliver the product directly for end consumption. As per the challan of boom spray machine, these had been issued in favour of Om Beej Bhandar, who is the supplier of the agro formulations of the UPL.”

The officer also claimed that “It is also evident that neither the company issued any receipt for the collection of the amount nor the amount collected is being shown in the GST returns.”

Reportedly, a person representing the Company said that their company is tax exempted under the GST Act. We will challenge this order in the court. They have even submitted the details of bills given to farmers, but they are not considering it as bills and the department officials can only give the information in this regard that why such orders have been passed.

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