T.N. sand mining scam | ED writes to Income Tax and GST departments on tax evasion

Enforcement Directorate uncovers massive tax evasion in Tamil Nadu sand mining, prompting action from Income Tax Department and GST.

The Enforcement Directorate which is probing serious irregularities in sand mining in Tamil Nadu has written to the Income Tax Department and GST pointing to a huge tax evasion and called for necessary action.

After conducting searches at sand mining sites, stockyards, office and residential premises of accused persons, including contractors and private persons at many locations across Tamil Nadu on September 12, 2023, the ED unearthed incriminating documents, including fake bills of sand sales and counterfeit QR codes which suggested GST losses to the Central and State governments.

As part of the probe, investigators roped in the expertise of IIT-Kanpur to conduct a technical study of all the sand mining sites using drones, Light Detection and Ranging (LiDAR) survey, bathymetric analysis and satellite imagery processing. The study established that there was excessive mining in the mining sites and its adjoining areas. While the actual cost of sand mined was estimated at ₹4,730 crore, the revenue shown in the book of accounts was only ₹36.45 crore, sources in the agency said.

In a letter to both the Income Tax Department and GST, the Enforcement Directorate said questioning of major excavator machine manufacturers M/s. Kobelco Construction Equipment India (P) Ltd. and M/s. JCB India Limited, had revealed that they had supplied a total of 273 excavator machines to 16 customers in Tamil Nadu.

The companies also confirmed that going by GPS location coordinates and other data, these excavators were used for mining of sand in the 28 sites. They also furnished the details of data regarding working hours and idling hours in respect of each of the excavators and the total volume of estimated sand mined, the sources said.

The Enforcement Directorate said that it emerged during investigation under the Prevention of Money Laundering Act that illegal sand mining was rampant across Tamil Nadu. Besides gross under-reporting of the GST component, the contractors and owners of excavators were involved in illegal sand mining. They concealed the total income generated through illegal mining and thus caused huge loss to the exchequer, the central agency said in the letter.