AI to Curb Tax Evasion in Granite Quarries: Tax Dept Targets Palnadu
The Income Tax Department has launched a tech-driven crackdown in Palnadu district of Andhra Pradesh, using AI to curb tax evasion in granite quarries. These efforts come amid rising concerns about large-scale tax leakage and unaccounted mining revenues in the region.
Why Palnadu’s Granite Quarries Are Under the Scanner
Palnadu is a major granite mining hub, but many quarries under-report revenues and evade GST and income tax. Officials estimate hundreds of crores in tax evasion annually. Most violations involve:
- Under-invoicing of exports
- Cash transactions without GST
- Shell companies used to divert profits
- No PAN linkage for transport and royalty records
How AI Is Helping Tax Officials
Andhra’s Income Tax and Mining Departments are now using AI and data analytics for better surveillance. Here’s how it works:
| Tech Tool | Purpose |
|---|---|
| Satellite Imaging | Track unauthorised quarrying beyond lease area |
| E-Way Bill Analysis | Spot under-reported shipments and fake invoices |
| AI Pattern Detection | Identify mismatches between royalties, GST, and income |
| TDS & PAN Cross-check | Verify subcontractors and real beneficiaries |
| Drone Surveillance | Map real-time movement of extracted material |
Legal Framework Being Invoked
The department is invoking multiple provisions of Income Tax Act and CGST Act, including:
- Section 132: Search and seizure
- Section 68–69C: Unexplained cash and investments
- Section 148A: Reassessment based on fresh intelligence
- Rule 138 of CGST: E-way bill tracking and compliance
- Mining Tenure Violations: Linked to royalty under Andhra Pradesh Minor Mineral Concession Rules, 1966
Recent High Court orders (e.g. State of Telangana vs M/s Srinivasa Granites) also empower state and central agencies to act jointly when mineral royalty and GST suppression is evident.
One Expert Tip for Quarry Operators
Get your e-Invoicing and TCS (Section 206C(1H)) in order. If your annual turnover exceeds ₹10 crore and you’re selling granite to registered buyers, non-compliance could attract 10% penalty on under-reported income plus GST interest and fines.
Practical Measures for Tax Compliance
- Register quarry leases under PAN + GSTIN
- Ensure e-way bill for every consignment above ₹50,000
- Link all royalty payments to PAN
- Use digital payment channels (no cash above ₹20,000)
- Declare income from granite sales under business/profession head in ITR
FAQs
Q1. Is GST applicable on granite quarrying?
Yes, GST @5% applies to the sale of rough granite blocks. Processed granite may attract 18%.
Q2. Are royalty payments by quarry lessees subject to TDS or TCS?
Yes. Royalty is subject to TDS under Section 194C/194J depending on agreement. TCS may apply at 0.1% u/s 206C(1H) on sales.
Q3. Can satellite data be used as evidence in tax proceedings?
Yes, under the Evidence Act and recent SC rulings, such data is admissible for corroborating evasion.
Summary
To tackle tax evasion in Andhra’s Palnadu granite belt, the IT Department is deploying AI tools like satellite mapping, e-way bill analytics, and drone tracking. Quarries evading GST and income tax face raids, reassessment, and penalties under the Income Tax Act and CGST Rules.
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