Tamil Nadu: Modus Operandi Of Illegal Sale Of Sand And Tax Evasion Emerges After ED Raids

In the wake of the Enforcement Directorate's (ED) raid on sand mining depots and premises of officials and contractors in more than 40 locations across the state, details of the modus operandi used for the illegal sale of sand and evasion of GST have emerged.

Sand in the state is sold online by the Water Resources department and an e-receipt is provided at the depots. However, there were allegations of sand being sold offline.

The department is under Duraimurugan, who is also the general secretary of the Dravida Munnetra Kazhagam (DMK).

According to a report by The Hindu that cited K Rajasekar, who is the president of The Tamil Nadu Sand Lorries Owners’ Protection Association, private persons were illegally selling sand offline at exorbitant prices.

While the price fixed by the government is Rs 1000 per unit, five-wheel lorries were forced to purchase three units of sand for Rs 5300 and ten-wheel lorries are forced to purchase five units for Rs 7950, he said.

Regarding the receipt provided, he stated, that drivers were provided bills with QR codes and GST numbers but these were fake and thus tax was evaded.

Further, he stated that the estimated revenue loss is Rs 3500-4000 crore in the last one year and four months.

Among those raided include people involved in sand mining named Karikalan, Ravi, Rathinam, Govindaraj, Executive Engineers Podhupani Thilagam and Muthusamy and Shanmugaraj, an auditor, political commentator Savukku Shankar posted on X (formerly Twitter).

The ED had earlier raided DMK Higher Education minister K Ponmudy and his son P Gautham Sigamani in connection with laundering money obtained from illegally mining excess red sand. It later filed a chargesheet against Sigamani.

A statement issued by the ED after the raids, stated, "The proceeds obtained from illegal mining were deposited in benami accounts and were layered through multiple transactions and accounts.

"Eventually, two overseas entities, namely PT Excel Mengindo in Indonesia and M/s Universal Business Ventures FZE in the UAE, were acquired.

"The Indonesian company, was shown to have been purchased for a nominal amount of Rs. 41.57 lakh, was later sold for over Rs. 100 Crore in 2022. It is suspected that huge amounts of cash was transferred through hawala & infused in purchase of these overseas entities."

The ED also attached an amount of Rs 41.9 crore in a fixed deposit as it was found to be part of the proceeds of crime. During the raid, it seized Rs 81.7 lakh of unaccounted cash and foreign currency worth Rs 13 lakh.