State Tax SIB Flags About ₹4.25 Crore GST Shortfall at BLW-Area Contractor Firm

State tax investigators in Varanasi say a railway contractor firm near Banaras Locomotive Works under-paid goods and services tax by about ₹4.25 crore, and that a tent house in the same compound kept trading after its registration was cancelled.

The findings come from the special investigation branch unit attached to the department’s first zone in the city. Officers inspected a firm that takes civil construction and manpower-supply work, including contracts routed through the government e-marketplace. According to the department, the firm’s 2025-26 returns showed work-contract services but did not properly reflect other supplies even though manpower contracts continued.

Between April and August 2026, the firm reportedly received more than ₹5.50 crore in payments while more than ₹1 crore of tax on that turnover was not deposited. Investigators also cite roughly ₹2.88 crore of input tax credit claimed without matching purchases, and about ₹36 lakh of credit taken on what they describe as fake bills from other firms. Together, the improper credit line is put above ₹3 crore, and the overall shortfall cited for the contractor is about ₹4.25 crore.

After the inspection, the firm deposited ₹46.64 lakh and assured officers the balance would follow. Additional Commissioner Grade-2 (SIB) Dipti Katiyar said manpower supply ordinarily leaves little room for genuine input tax credit, and that the returns appeared to use improper credit in a planned way. She said action against fake bills, illegal credit and hidden turnover would continue.

In the same premises, a tent-house and catering business was found operating after its GST registration was cancelled in March 2026. Returns had not been filed since July 2025, yet large-scale hiring of tents and catering gear continued, investigators say. Teams seized more than a dozen registers and bill books. Preliminary reading of those books points to undeclared sales of roughly ₹2 crore to ₹2.5 crore from 2022-23 onward.

These figures are the tax department’s case as presented after Tuesday’s inspection. The firms can contest assessments through the statutory route. For the public record this week, the SIB unit has put a ₹4.25 crore GST gap on the railway contractor, booked a partial deposit, and flagged a cancelled-registration tent house still trading beside it.

GeM manpower contracts are meant to leave a clean payment trail. The SIB reading is that the contractor’s returns did not match that trail for the April–August window, and that input tax credit was inflated beyond what a labour-supply business can normally justify. Dipti Katiyar’s remark about low genuine ITC in manpower work is the department’s policy framing for why the claimed credits looked suspicious.

The tent-house strand is separate but linked by premises. A cancelled GST registration is supposed to stop taxable supply; investigators say catering and tent hire continued anyway, with books showing multi-year undeclared sales. Seized registers will now feed assessment orders. The ₹2–2.5 crore undeclared-sales range is a preliminary departmental estimate, not a court decree.

For BLW-area traders watching the raid, the message from the tax side is enforcement against fake bills and hidden turnover. For readers, the verified public points are the Tuesday inspection, the ~₹4.25 crore shortfall attributed to the railway contractor, the ₹46.64 lakh already deposited, and the cancelled-registration tent house found still working in the same compound.