CBIC Directs CGST Zones to Coordinate With State Authorities to Check GST Evasion in Illegal Mining

The Central Board of Indirect Taxes & Customs (CBIC) has instructed its field formations to establish structured coordination with state authorities to share information related to illegal mining and the transportation of minerals. The directive is aimed at curbing Goods and Services Tax (GST) evasion across the sector.

As per the instructions, all Principal Chief Commissioners and Chief Commissioners of CGST Zones must ensure that a Nodal Officer is designated in each zone. This officer will be responsible for coordinating with the respective State Mining Department and setting up a mechanism for the periodic sharing of information regarding illegal mining and mineral transportation detected within their jurisdiction.

The board noted that timely sharing of this information will help identify cases involving the suppression of taxable supplies, non-payment or short payment of GST, wrongful availment of input tax credit, and other violations of the Central Goods and Services Tax Act, 2017. This cross-departmental data sharing between CGST formations, State Mining Authorities, and tax administrations will enable mining records to be compared directly with E-Way Bills, e-invoices, and GST returns.

This directive follows observations made by the Comptroller & Auditor General (C&AG) in its report titled “Assessment, Levy and Collection of GST on Minerals.” The audit report highlighted that State Mining Authorities frequently detect instances of illegal mining, illegal transportation, seizure of minerals and vehicles, cancellation or suspension of mining leases, excess extraction, and other violations of mining laws. However, the report observed that there was previously no structured or institutional mechanism for the periodic sharing of such information between State Mining Authorities and CGST field formations, resulting in valuable enforcement intelligence being underutilized.

Under the new framework, information received from state authorities will be analyzed to identify GST implications, leading to appropriate actions under the provisions of the CGST Act, 2017. Furthermore, intelligence generated through this process will be disseminated to jurisdictional Commissionerates or DGGI formations as necessary. Periodic review meetings between CGST field formations and State Mining Authorities have also been prescribed to evaluate the effectiveness of the information-sharing mechanism and resolve operational issues.

"The integration of data between state mining authorities and CGST field formations marks an important step toward tightening tax compliance in traditional sectors. By cross-referencing mining records, E-Way bills, and GST returns, regulatory bodies can systematically address compliance gaps identified in recent audits. Businesses operating in mineral extraction and logistics must ensure robust internal record-keeping and transparent reporting to align with this enhanced multi-departmental oversight." — Dr. Shishir Gupta, Founder & CEO, StartupLanes