In a major enforcement action, the Central Goods and Services Tax (CGST) department has exposed a large-scale tax evasion network involving illegal pan masala manufacturing units operating in Gurgaon and adjoining areas of Mewat.
The department estimated the evasion to be over Rs. 10 crore, with one key accused already taken into custody.
The operation, conducted on Friday, targeted two covert manufacturing facilities that were allegedly producing and distributing pan masala and jarda without complying with GST regulations. Officials revealed that the units were operating without proper registration and deliberately underreporting production to avoid tax liabilities.
According to investigators, the racket was orchestrated by Vijay Kumar Agarwal, who is suspected of masterminding the illegal operations. He allegedly appointed employees as dummy directors to conceal his involvement and facilitate the clandestine functioning of the units. Agarwal was presented before a judicial magistrate and has been remanded to 14 days of judicial custody.
During the raids, CGST officials seized several unregistered and covertly operated machines used in the production and packaging of pan masala. These included multiple pan masala packing units and raw material stock, along with incriminating documents that pointed to systematic tax evasion. Officers also discovered that no statutory production or machinery records were maintained, in clear violation of GST laws.
Preliminary findings suggest that the accused bypassed mandatory GST registration and suppressed actual output levels to evade taxes. The units reportedly manufactured chewing tobacco products—pan masala and jarda—without paying applicable duties, thereby causing significant revenue loss to the exchequer.
Authorities further noted that under GST provisions, manufacturers are required to pay a fixed tax based on the number of machines deployed for production. In this case, the evasion is estimated at ₹1 crore per machine annually, in addition to GST on finished goods. By operating multiple undeclared machines, the accused significantly reduced their tax burden through illegal means.
The CGST department has initiated proceedings to recover the evaded tax amount along with applicable penalties. Officials indicated that further investigation is underway to identify other beneficiaries and uncover the full extent of the network.
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