The Uttar Pradesh state tax department detected alleged circular trading and irregular input tax credit (ITC) claims by three firms engaged in advertising and display services, resulting in the firms immediately depositing ₹ 2.48 crore, officials said on Friday.
The Special Investigation Branch analysed TCS, turnover and tax liability data using the GST Prime portal and other analytical tools. The analysis indicated that three firms providing advertising and display services were allegedly engaged in circular trading with one another and passing on inadmissible ITC to evade tax liability. The investigation team comprised deputy commissioner Sanjeev Niranjan, state tax officers Deepak Singh, Arvind Verma and Raghavesh Singh besides assistant commissioner Kamlesh Kumar.
Under Section 51 of the GST Act, government departments and local bodies deduct TCS at 2%—1% each under SGST and CGST on payments made to service providers.
Additional commissioner, Grade-II (Special Investigation Branch), state tax, Lucknow Zone-I, Manoj Kumar Vishwakarma said the irregularities came to light during data analysis of tax collected at source (TCS) by government departments and local bodies on payments made to service providers. The department also found that tax liabilities were discharged through erroneous ITC claims, Vishwakarma said. “During the investigation, ₹ 2.48 crore was deposited immediately by the three firms,” Vishwakarma said, adding that various documents and records had also been seized. Examination of these records could reveal further tax evasion, he said.
