With a view to make GST offences a predicate offence punishable with rigorous imprisonment and fine, the Central Government may soon bring such offences under the stringent Prevention of Money Laundering Act.
The proposal regarding the same is likely to be discussed at the GST Council meeting scheduled on 21st June.
The proposal had been made by the Central Economic Intelligence Bureau (CEIB) to the tax department to consider treating the GST frauds under the ambit of the PMLA.
The tax department working under the Finance Ministry has unearthed over Rs 8,000 crore of GST evasion till April.
Among others, a case has been booked by the DGGI’s Pune zonal office against the Indian Oil Corporation, Mumbai for evading central excise duty to the tune of Rs 4,000 crore on sale of ethanol blended oil. The DGGI has also booked a case against the Haryana Vidyut Prasaran Nigam Ltd, Panchkula for service tax evasion of Rs 760 crore and Hindustan Petroleum Corporation Ltd for central excise evasion of Rs 346 crore, among other cases.
According to a report in TOI, the investigative agency said, up to April it has detected total GST evasion of Rs 8,095 crore, of which the evasion towards central excise is estimated to be Rs 4,946 crore, service tax of Rs 2,771 crore and Rs 378 crore in GST.
Significantly, the CEIB has also linked many big banking frauds where thousands of crores of loans have turned bad with entities engaged in fake input tax credit using shell companies. Since these shell companies are merely paper entities with no real business activity or assets, banks find it difficult to recover losses.
