MM TAX CLUB

Remote LCS being EDI enabled will help in providing real-time data of movement of goods: Union Finance Minister

EDI enablement of customs stations is making tax system and customs procedures ‘faceless’ and ‘automated’: Revenue Secretary

North Eastern Region (NER) holds a high geostrategic significance and carries an immense trade potential as the Land Custom Stations (LCS) enable flow of trade and transit with neighbouring countries: CBIC Chairman

CBIC firmly committed to leveraged technology for benefit of trade and commerce: CBIC Member (Customs)

Movement of goods and customs clearances to now become more efficient, thus enhancing regional trade and fostering economic growth

Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman inaugurated the Electronic Data Interchange (EDI) at Land Customs Stations (LCS) of the North East Region (NER), via virtual mode in New Delhi today. With these remote LCS getting EDI-enabled, the movement of goods and customs clearances will now become more efficient, thus enhancing regional trade and fostering economic growth.

The EDI launch was also attended by Shri Sanjay Malhotra, Revenue Secretary, Ministry of Finance; Shri Sanjay Kumar Agarwal, Chairman, Central Board of Indirect Taxes and Customs (CBIC); Shri Alok Shukla, Member (Admin & Vig), CBIC; Shri Vivek Ranjan, Member (Tax Policy & Legal), CBIC; Shri Surjit Bhujabal, Member (Customs), CBIC; Smt. Aruna Narayan Gupta, Member (IT & Tax Payer Services & Technology), CBIC; and senior officials of CBIC and Department of Revenue, Ministry of Finance.

Led by Prime Minister Shri Narendra Modi’s vision for creating modern digital infrastructure and ensuring that the benefits of the digital revolution reach everyone, the Union Finance Minister, in her speech at Guwahati on 21^st July, 2023, had commended the Central Board of Indirect Taxes and Customs (CBIC) for converting the non-EDI LCS, mostly located in remote border areas of North and North-East India, into EDI-integrated LCS. She had exhorted the department to incorporate the rest of the functional LCS in NER into the EDI System.

During her address at the launch of EDI at Land Customs Stations in the North East region, Smt. Sitharaman called upon the CBIC and Customs to address the challenges faced by exports and stated that remote LCS getting EDI enabled is important as it will help in providing real-time data on the movement of goods.

The Union Finance Minister also called upon the Customs Department to be alert and vigilant while manning the post in sensitive border areas, especially in areas that are densely populated and vulnerable.

In his address on the occasion, Shri Malhotra said, “The vision of our Prime Minister Shri Narendra Modi to make India a developed country by 2047 involves creation of modern digital infrastructure and use of technology so as to ensure that benefits of digital revolution reach all the citizens. The Electronic Data Interchange (EDI) enablement of the customs stations is one such step in this direction in making tax system and the customs procedures ‘faceless’ and ‘automated’.”

“It is heartening to know that through this event, CBIC has brought the much needed focus on the development of North East India by enabling EDI at the land customs stations in these remotest parts of NER,” Shri Malhotra added.

In his welcome address on the occasion, Shri Agarwal said that the North Eastern Region (NER) holds a high geostrategic significance and carries an immense trade potential as the Land Custom Stations (LCS) enable flow of trade and transit with neighbouring countries.

Shri Agarwal further said that there are 44 LCSs in NER covering 7 States — Assam, Meghalaya, Tripura, Mizoram, Manipur, Arunachal Pradesh and Sikkim. The creation of physical infrastructure and automation of custom processes at the LCSs have always remained a priority of the Indian Customs.

While giving Vote of Thanks, Shri Surjit Bhujabal, Member (Customs), said, “The launch of the EDI system today signifies a monumental step towards enhancing efficiency and promoting Ease of Doing Business in the remote locations of NER. This achievement underscores our firm commitment to leveraging technology for the benefit of trade and commerce.”

With a focus on harnessing technology for development of NER, the CBIC has completed the task of EDI enablement at the following LCS - Ghasuapara, Bholaganj, Shellabazar, Borsora, Khowaighat, Baghmara, Golakganj, Karimganj and Dawki along Indo-Bangladesh border and Zokhawthar along Indo-Myanmar border. These LCSs presented distinct challenges, situated in far-flung areas without Optical Fibre or Mobile Networks. CBIC overcame these obstacles by installing VSAT at several locations. The journey symbolizes not only the technical enhancement of Customs operations but also the commitment of CBIC towards nation's progress in Kartavya Kaal.

The Jamshedpur GST Intelligence team's relentless pursuit culminated in the arrest of Shiv Kumar Deora in Kolkata, throwing light on an intricate GST scam worth potentially over Rs 500 crore. Deora, who had been eluding capture for several months, was finally apprehended in a luxurious flat, leading to his incarceration post-medical examination. This case, part of a broader investigation into GST fraud, reveals the fraudulent establishment of over 20 fake companies and transactions amounting to Rs 780 crore, a figure suspected to escalate to Rs 2000 crore.

Web of Deceit: The Creation of Fake Companies

Investigations unearthed that Shiv Kumar exploited documents of unsuspecting women under the guise of employment to establish over 20 bogus companies. These entities were involved in fraudulent transactions totaling Rs 780 crore, involving major Indian cities such as Hyderabad, Chennai, Vijayawada, Delhi, and Mumbai. The meticulous crafting of this network underscores a blatant misuse of the GST system for personal gain, with the potential total fraud amount feared to reach Rs 2000 crore.

Broader Implications: A Nationwide GST Scam Network

The arrest of Shiv Kumar is not an isolated event but part of a larger crackdown on GST fraud across India. Recent arrests, including that of Vicky Bhalotia, highlight a sprawling network of individuals exploiting the GST system. This systemic fraud not only undermines the integrity of India's financial frameworks but also results in significant revenue loss for the government. The case of Shiv Kumar Deora adds to the alarming data, including the recent discovery of 29,000 fake firms and Rs 44,000 crore of GST tax evasion detected between May and December 2023.

Government Response and Future Challenges

In response to the escalating GST fraud, the Finance Ministry, alongside Central and State tax administrations, has initiated a rigorous crackdown on fake entities. This nationwide effort aims to purge the GST ecosystem of fraudulent activities and safeguard government revenue. As investigations deepen, the focus sharpens on identifying the masterminds behind these scams, with law enforcement agencies committed to preventing future fiscal anomalies. Shiv Kumar's arrest marks a significant milestone in this ongoing battle, signaling the government's stern resolve against financial fraudsters.

The arrest of Shiv Kumar Deora in Kolkata not only illuminates the extent of GST fraud in India but also serves as a stern warning to others involved in similar illicit activities. As authorities continue to unravel this complex web of deceit, the implications for India's tax system and overall financial health remain profound. The determined efforts of the GST Intelligence team in Jamshedpur underscore a critical stride towards restoring integrity and trust in India's tax mechanisms.

Directorate of Enforcement (ED) has filed a Prosecution Complaint (PC) on 21.10.2023 before the Hon’ble Special Court(PMLA), Shimla against KC Group of Institutions at Nawanshahr, Punjab and at Pandoga, Una, Himachal Pradesh;  ASAMS Education Group; Skill Development Society; Skill Development School; persons associates with these institutes; officials of Directorate of Higher Education Shimla and  Bank officials as they were involved in the process/activity connected with proceeds of crime obtained through illegal activity of fraudulently receiving scholarship under Post Matric Scholarship Scheme for SC/ST/OBC students of Himachal Pradesh. The Hon’ble Court has taken cognizance of the PC on 23.02.2024. 

ED initiated money laundering investigation on the basis of FIR registered by Central Bureau of Investigation, Shimla, Himachal Pradesh regarding the irregularity in disbursement of scholarship by the Directorate of Higher Education, Shimla, Himachal Pradesh under Post Metric Scholarship Scheme for SC/ST/OBC students. 

ED investigation revealed that these institutes had fraudulently received scholarship funds by verifying details of students (i) who were not enrolled in any course with these institutes; and (ii) who left the institute without completing their studies. Further, in order to fraudulently obtain more amount of scholarship funds, false details of students were uploaded on the scholarship portal by (i) changing course of students in subsequent years; (ii) by changing the caste category of students in subsequent years; (iii) by showing students as hosteller instead of day scholars and (iv) by claiming bogus course fee structure for distance education courses. The proceeds of crime, so obtained, by the accused person were used to acquire movable & immovable property in their name and in the name of their family members.  

Earlier in the case, searches under the provisions of PMLA, 2002 were conducted which resulted in seizure of incriminating material, cash to the tune of Rs. 75 lakh and freezing of an amount to the tune of Rs. 2.55 Crore lying in the bank accounts.  Hitesh Gandhi, Rajdeep Singh, Krishan Kumar and Arvind Rajta being guilty of offence of money laundering were arrested on 30.08.2023. 

 Further ED have passed two provisional attachment order for attaching movable and immovable assets totaling to Rs. 10.7 Crore

   Directorate of Enforcement (ED) conducted search operations under provisions of Prevention of Money Laundering Act (PMLA), 2002, on 23-02-2024 and 24.02.2024 at 10 locations in Mumbai, Chennai and Kochi at the premises of M/s NIUM India Pvt Ltd and its directors based in Mumbai, M/s Xoduz Solution Pvt Ltd, M/s Vikrah Trading Enterprises Pvt Ltd, M/s Tyrannus Technology Pvt Ltd, M/s Future Vision Media Solutions Pvt Ltd, M/s Aprikiwi Solution Pvt Ltd. in Chennai and Raphael James Rozario, Kochi to trace and unearth the proceeds of crime  in the case of illegal online loan/gambling/betting apps through cluster of mule accounts in Kerala. 

ED initiated the investigation based on FIR registered by Kerala Police and Haryana Police on the complaints given by various persons for their exploitation/cheating through online platforms i.e.  Loan/gambling/betting apps being controlled by Chinese Entities.

ED investigation revealed that Proceeds of Crime generated from the above apps/ other platforms, are aggregated and laundered through mule accounts opened in various banks in Kerala State using payment aggregators. The funds collected, layered through multiple shell companies in Chennai, Bangalore, Delhi, Mumbai etc.,  and were finally being remitted outside India through various channels such as Crypto Currency, against fake imports of software from Singapore, Forex currency purchases, etc.

ED investigation revealed  that the accused floated many shell entities in India and used the same to send PoC to shell companies floated in Singapore. These Singapore shell entities would raise fake invoices for supply of software/ other services in the name of the shell Indian entities in India where the PoC would have already been aggregated. These invoices are shared by global forex settlement platform named M/s NIUM Singapore Pte Ltd. (Singapore) who has Indian subsidiary Company namely NIUM India Pvt. Ltd.  to collect the money from Indian entities based on fake invoices and  transfer the same as outward remittance to M/s NIUM Singapore Pte Ltd in the name of payment for technical services and such funds will be credited such funds in virtual wallet of Singapore Shell entities. Except the fake invoice, no other documentation was collected by NIUM India Pvt Ltd from the remitters. In this manner, the shell remitter, the shell remittee and the sham import transactions were concealed from the Bank and monitoring agencies and the proceeds of crime are thereby laundered out of India.

During the course of the search operation, Rs. 123 Crore (approx.) suspected to be Proceeds of Crime, belonging to shell entities of Singapore and parked in bank accounts of NIUM Indian Pvt. Ltd. on their behalf have been frozen. Search operations also resulted in the recovery & seizure of several digital devices, various incriminating documents, multiple bank accounts used for laundering, and details of various movable and immovable assets of the accused person and entities.

Further investigation is under progress.

ED initiated PMLA investigation on the basis of FIR registered by the CBI, ACB Hyderabad against Kesari Sathish for misappropriation of Government money to the tune of Rs. 1.72 Crore. The FIR was registered against him based on a complaint lodged by the Supt. of Post Offices, Warangal Division, Telangana. Kesari Sathish, while being employed as Sub-Post Master in SPO-Kodakandla, Telangana during the period 19.04.2021 to 17.05.2022, allegedly misappropriated Government funds amounting to Rs. 1.72 Crore by making falsified entries in the system on Sundays and holidays.

 He misappropriated funds by way of making back dated entries in SAP software of the Post Office in a fraudulent manner.  ED investigation revealed that the proceeds of crime generated by him were either directly deposited in his post office savings account or were transferred to his personal bank accounts from the bank accounts of his known persons in which equivalent amount of cash was given by him. The proceeds of crime thus obtained, were used by him for playing online casino games, giving loans to various persons, repayment of loans and for various other personal purposes.

  ED investigation thus revealed that Kesari Sathish had dissipated the proceeds of crime. However, a land parcel having book value of Rs. 3.26 Lakh was identified during investigation and it was revealed that to prevent the same from being attached, Kesari Sathish had transferred it to his relative without any sale consideration. The said land parcel has thus been provisionally attached under the provisions of PMLA, 2002.  

Further investigation is under progress