In its investigation into the business activities of crypto currency exchange, WazirX, the GST Mumbai East Commissionerate has detected GST evasion of Rs 40.5 crore. The commissionerate has also recovered Rs 49.20 crore in cash in evaded GST dues, interest and penalty.
WazirX exchange is managed by Zanmai Labs Pvt Ltd and cryptocurrency 'WRX' is owned by Binance Investment Co. Ltd, Seychelles. WazirX was registered as Zanmai Labs in December 2017 as a domestic cryptocurrency startup.
The exchange provides option to a trader to transact in rupees or WRX. The WRX have to be purchased from WazirX platform. The firm is charging commission on each transaction in cryptocurrency from both the buyer and seller. However, the rate of commission is different for both the transactions. The transaction in rupees attracts a commission of 0.2% and the deals in WRX a commission of 0.1%.
During investigation, it came out that the firm would mop up revenue from commission as trading fees, deposit fees and withdrawal fees. It was paying GST only on commission earned in rupees but not on commission earned in WRX, GST officials said.
“A GST at the rate of 18% is applicable on these transaction fees. Son, GST of Rs. 40.5 crore was not paid. The firm paid this along with interest and penalty only on December 30. A total sum of Rs. 49.2 crore was recovered on the spot from WazirX. Further investigation is in progress,” a spokesperson of the commissionerate said.
This case is a part of the special anti-tax evasion drive which relies on intensive data mining and data analytics, the spokesperson said. The CGST Mumbai zone officials investigate business transactions related to emerging economic space like e-commerce, online gaming and non-fungible tokens, to identify areas of possible tax evasion. “The CGST department will cover all the cryptocurrency exchanges falling in Mumbai zone and will also intensify this drive in the coming days,” the spokesperson said.
"Zanmai Labs Pvt. Ltd. has been diligently paying tens of crores worth of GST every month. There was an ambiguity in the interpretation of one of the components which led to a different calculation of GST paid. However, we voluntarily paid additional GST in order to be seen as cooperative and compliant. There was and is no intention to evade tax," said a Zanmai Labs spokesperson.
"That being said, we strongly believe that regulatory clarity is the need of the hour for the Indian crypto industry. It will also provide us with more clarity on taxation, so that we can work in sync with the lawmakers, and continue to be a responsible industry player," he added.
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