Massive Tax Evasion Scheme Uncovered in Rourkela's Heavy Vehicle Sector

Tax Evasion in Heavy Vehicle Construction

In Rourkela, a significant tax evasion scheme linked to the construction of heavy cargo vehicle carriages has been exposed, as reported on Friday. Although these vehicles are bought and modified within Odisha, the Goods and Services Tax (GST) filings are being conducted in the neighboring state of Jharkhand, leading to substantial revenue losses for Odisha's government.

Sources indicate that companies involved in building carriages for heavy vehicles, including trailers, tankers, trucks, tippers, and tractors, must secure trade licenses. Furthermore, they are required to obtain certifications from the Automotive Research Association of India (ARAI) based in Pune to ensure compliance with safety standards.

However, in the Rourkela region, only a handful of agencies are officially registered. Over 100 garages are reportedly operating in areas such as Vedvyas, Kalunga, Kuanrmunda, Rajgangpur, and along the main road, providing services for heavy vehicle carriage construction and body modifications. Despite the need for skilled technicians and proper infrastructure, many unlicensed garages with inadequately trained workers are violating regulations.

GST is applicable to the fabrication of heavy vehicle carriages and bodies, and ideally, the state should collect this tax. However, in reality, GST registrations for these operations are being processed in Jharkhand.

Even though labor and materials are sourced from Odisha, the 28% GST charged per vehicle body is benefiting Jharkhand instead. This ongoing loophole in cross-border GST filings is causing Odisha to lose crores in tax revenue each year. Despite awareness of the situation, the state Transport department has reportedly remained inactive, according to sources. A truck buyer, who wished to remain anonymous, claimed that a network is operating across Odisha and Jharkhand, involving individuals who fabricate truck bodies and evade GST.

Allegations suggest that truck bodies are manufactured in Rourkela and then sent to Jharkhand at reduced prices. GST filings are subsequently completed in that state, using fabricated documents to register the heavy vehicles. These documents are later presented at the Rourkela Regional Transport Office (RTO) to obtain fitness certificates for the vehicles. When approached, Rourkela Regional Transport Officer Bibhav Bhanjan Samantsinghar mentioned that only four to five garages in the city are authorized to manufacture truck carriages and bodies.

Additionally, a separate license has been issued to private garages in Vedvyas. The Motor Vehicles Inspector (MVI) team only issues fitness certificates after thorough inspections. Samantsinghar acknowledged that vehicle registrations in other states result in revenue losses for Odisha, but no formal complaints regarding such a racket have been received by the department thus far. He stated, “If any such complaint is received, appropriate action will be taken.” Rourkela GST Enforcement department’s Deputy Commissioner Jagdish Sa also noted that no complaints have come to their attention, adding, “If such tax fraud is occurring, it would be subject to investigation.”