The Special Investigation Branch (SIB) of the Uttar Pradesh State Tax Department has uncovered an alleged GST evasion of ₹2.14 crore during searches conducted at three premises of a chemical manufacturing firm located in Raebareli and Lucknow. The investigation revealed suspected manipulation of e-way bills, misuse of credit notes to reduce tax liability, and significant discrepancies in stock records. Following the action, the trader deposited ₹77.16 lakh into the government treasury, while the investigation continues.
According to the department, simultaneous searches were carried out at the firm’s three business locations. Examination of digital records, e-way bills, GST documents, and physical stock allegedly exposed a sophisticated method of tax evasion. Investigators claim the firm altered the description of goods and the corresponding HSN (Harmonized System of Nomenclature) code in e-way bills while the consignments were already in transit, allegedly concealing the true nature of transactions and affecting tax liability.
One particular transaction drew the attention of investigators. An e-way bill had originally been generated for the transportation of goods from Maharashtra to Punjab. During transit, however, the buyer’s details and the description of the goods were allegedly modified, and the same consignment was subsequently shown as being sold to the Raebareli-based firm. When officials intercepted the vehicle, the goods being transported reportedly did not match the details mentioned in the e-way bill. The mobile enforcement team detained the vehicle and the consignment and imposed a penalty of nearly ₹10 lakh.
Data analysis further indicated that the firm allegedly used credit notes to understate its GST liability. Vehicles shown in records as carrying returned goods, on the basis of which credit notes had been issued, were found to be physically located in Odisha, Gujarat, and Rajasthan at the relevant time. Investigators suspect that fictitious return transactions may have been created through documentation to reduce tax payments.
During physical verification, officials also compared the chemical stock available at the premises with inventory recorded in the firm’s books. The department claims to have found significant discrepancies involving chemical stock valued at approximately ₹12 crore. Investigators are now examining whether the mismatch resulted from genuine business operations or formed part of a larger tax evasion mechanism. Purchase records, sales invoices, transportation documents, and warehouse records are all being scrutinised.
Officials said the seized documents, e-way bills, banking records, and digital evidence will undergo detailed forensic examination. Suppliers, buyers, transporters, and other entities connected with the transactions may also be questioned to establish the complete chain of movement of goods and financial transactions. If the investigation identifies the involvement of additional individuals or business entities, action will be taken against them under the GST Act and other applicable legal provisions.
Tax experts note that the GST regime’s reliance on e-way bills, digital documentation, and advanced data analytics has significantly strengthened the government’s ability to detect inconsistencies between the movement of goods, inventory records, and tax payments. They believe that continuous digital monitoring, real-time data analysis, and timely investigations are essential to preventing tax evasion involving manipulated e-way bills, fictitious credit notes, and false inventory declarations. The State Tax Department has stated that the investigation remains underway, and further legal action will be taken based on the evidence collected.
