Leonia Resort's CMD Arrested Over GST Evasion

It may be late but the law will catch up with GST violators in Hyderabad.

In a major development, Leonia resorts CMD GS Chakravati has been arrested by Director General of GST Intelligence (DGGI), Hyderabad, for evasion of GST to the tune of Rs. 13.81 crores.

Sources said the resort has been collecting GST from their customers/guests and retaining the same with them, besides diverting the tax amounts so collected for private purposes, instead of paying it to the government since July 2017.

The GST law stipulates that all the amounts representing GST collected from service recipients have to be mandatorily credited into the government credit and that periodical returns are filed by a specific date, every month.

However, the resort and its management chose to not to pay the tax to the government and not filed any statutorily prescribed returns, with a deliberate intention to evade GST.

The management of the resort has a dubious history of not paying applicable service tax also in the past and several notices were issued to them by the Service Tax Department in the past.

Collecting GST and failing to pay the same to the government beyond a period of 3 months from the date on which such payment becomes due, where the amount of tax involved is more than Rs. 5 crores, is one of the gravest forms of offences.

Considering their very nature, such offences have been treated as cognizable and non-bail able offences and any person committing such offences are punishable with imprisonment for a term which may extend to 5 years and with fine.

 Accordingly, pending investigation, the CMD of the said resort, who has not been cooperating with the investigation, has been arrested and remanded to the judicial custody till 18th January 2019. During the course of the investigation, the CMD admitted that GST was collected and not paid to the government and discharged the part liability of Rs. 2.27 crores only. Five Bank accounts connected to the Business operations of the said resort have been provisionally attached.