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Indian recruitment firm owner held for Goods and Services Tax evasion

Indian recruitment firm owner held for Goods and Services Tax evasion

July 9, 2024
Tax law on a table.

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Officers of the Central Goods and Services Tax Gandhinagar Commissionerate in India have uncovered a major tax evasion case involving Xerxes HR Services Private Limited, reports The Times of India. The human resource firm, primarily supplying recruitment services to government bodies like the Gujarat Pollution Control Board and Gujarat State Seeds Corporation Limited, was found to be collecting but not remitting Goods and Services Tax (GST), amounting to INR 67.4 million (USD 807,213) from FY 2017-18 to FY 2023-24.

Acting on specific information, the investigation revealed that the company’s director, Virbhadrasinh Chauhan, had been systematically evading tax by collecting GST at the rate of 18% (applicable on services) but failing to file returns or deposit the collected taxes.

Despite the cancellation of the company’s GST registration due to non-filing of returns, Xerxes HR Services continued to issue taxable invoices with a quoted GST registration number. Upon scrutinizing bank statements, financial records and information from various government departments, Gandhinagar CGST officials discovered that the firm had created bogus financial records to conceal substantial service charges and GST collections. The scheme allowed them to operate undetected for several years. Chauhan was arrested last week under Section 69 of the CGST Act, 2017.