HYDERABAD — What began as a review of suspicious transport records has widened into an interstate investigation stretching from the granite quarries of Khammam to commercial hubs in Rajasthan and Madhya Pradesh.
Officials in Telangana say they have uncovered what they describe as a coordinated tax evasion racket in the granite trade, one that relied on bogus firms, stolen identity documents and falsified transport paperwork to move high-value stone consignments without paying mandatory dues.
The commercial taxes department estimates that the losses may be around Rs 100 crore, though senior officials caution that the final figure could be significantly higher as inquiries continue. The network, they say, appears to have operated for nearly a year, exploiting regulatory gaps and the complexity of interstate commerce.
Investigators have traced the operation to traders based in Khammam and Karimnagar districts. From there, consignments of sought-after black granite were allegedly dispatched to buyers in northern markets, bypassing standard invoicing and documentation requirements.
Authorities declined to identify the companies under scrutiny, citing the ongoing nature of the investigation, but confirmed that five to six entities have been identified so far.
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Granite in High Demand
At the center of the case is black granite quarried in Khammam, a material prized for kitchen platforms and staircases and widely used in construction projects across northern India. Its popularity, officials say, created both opportunity and temptation.
The interstate movement of goods in India requires proper documentation, including e-Way bills — electronic permits designed to track consignments and ensure the collection of the applicable 18 percent tax on interstate transactions. According to investigators, several out-of-state agents operating locally are believed to have helped businesses circumvent these requirements.
The alleged scheme relied on shell firms registered in the names of unsuspecting individuals. These entities, officials say, were used to generate transport documents that appeared legitimate at first glance. In many cases, granite was dispatched either without invoices or with fabricated e-Way bills.
When authorities later attempted tax recovery, they encountered a pattern: companies that existed on paper but not in practice. Addresses were found to be bogus or untraceable. Directors were either unaware of the firms registered in their names or could not be located. The use of transport vehicles from other states further complicated oversight. By routing shipments through vehicles registered elsewhere, operators were able to obscure patterns and delay detection, investigators said.
Identity Documents for a Price
The inquiry has also drawn attention to the vulnerability of individuals whose personal identification documents were allegedly misused. According to officials, poor or unsuspecting individuals were paid as little as Rs 5,000 in exchange for copies of their Aadhaar and PAN cards. In some instances, they may not have understood how the documents would be used. Fake firms were subsequently registered in their names, creating a legal trail that pointed back to them when tax irregularities surfaced.
Those individuals now face the prospect of legal scrutiny. Authorities said that document holders whose identities were used in the scheme may have to demonstrate that they were unaware of the misuse. “As a precaution, citizens should be careful about sharing their Aadhaar numbers with anyone,” one official said, underscoring the broader implications of identity-based fraud in an era of digitized compliance systems.
The case has prompted coordination among tax departments in Telangana, Rajasthan and Madhya Pradesh. Telangana officials alerted their counterparts in the affected states after identifying common transaction patterns and repeated consignments linked to the same network of intermediaries. Investigators said suspicious travel patterns of certain vehicles ultimately exposed the operation. Repeated interstate movements, often involving similar routes and destinations, raised red flags during routine data analysis.
Scrutiny, Recovery and Next Steps
While the investigation is ongoing, officials say enforcement measures could include penalties far exceeding the original tax liability. Authorities are examining whether taxes should be levied at 200 percent more than what is normally owed, in line with provisions for deliberate evasion.
Legal cases may also follow, depending on the outcome of the inquiry. The commercial taxes department has not yet detailed the full scope of the alleged network, but officials indicated that the scheme relied on middlemen who coordinated between quarry operators, transporters and shell companies. Their role, investigators believe, was critical in sustaining the operation across state lines.
For now, tax authorities are focused on tracing financial flows, verifying the identities of individuals listed as firm directors and reconciling transport records with actual shipments. Each e-Way bill and vehicle movement is being cross-checked against tax filings.
The investigation has highlighted the challenges of regulating high-value commodities that move quickly across jurisdictions. Granite, bulky and expensive, is not easily concealed. Yet, as officials describe it, the manipulation of paperwork allowed consignments to travel with a veneer of legitimacy.
In Hyderabad, tax officers continue to sift through digital records and field reports, attempting to untangle a network that spanned multiple states and operated largely in plain sight. Whether the estimated losses remain at Rs 100 crore or climb higher will depend on the outcome of those audits.
For the individuals whose names appeared on company registrations, and for the traders now under scrutiny, the consequences may unfold in the months ahead as investigators determine the full extent of the alleged evasion and decide what penalties, if any, will follow.
