DGGI SCN – United Worldwide Couriers Pvt Ltd (GST)

Page 1

• File Reference: DGGI/INV/GST/144/2024-Gr C-0/0 – Pr. ADG-DGGI-ZU-DELHI

• Document Type: Show-Cause-cum-Demand Notice – No. DGGI/DZU/43/2025-26

• Statutory basis: Issued u/s 74 (1) of CGST Act 2017, corresponding State GST Acts & § 20 IGST Act 2017.

• Taxpayer: M/s United Worldwide Couriers (P) Ltd. (UWCPL)
  • GSTIN 07AAACU1765H1ZC
  • Regd. address – Lower G.F., Bldg-1, Khasra-505, Mahipalpur, New Delhi 110037
  • Incorporation: 09-Dec-1997, CIN U64120DL1997PTC089508 (Non-Govt Co.)
  • Directors: Manohar Verma (DIN 00379441) – Sanjay Kapur (00379520) – Vipin Sharma (00379489) – Simmi Kapur (00723791)

• Principal business: International courier services (out-bound & in-bound) + Air-space (IATA agent).

• Registered Customs Authorised Courier under Courier Imports & Exports (EDI) Regs 2010.

• Declared service codes & nature:
  • HSN 00440014 – courier agency
  • 00440189 – cargo handling
  • 00440266 – transport of goods by air
  • 00440406 – renting immovable property
  • 00440225 – business auxiliary

Page 2

• Core taxable services classification:
  • “Postal & Courier Services” – SAC 9968 – GST 18 % (Not. 11/2017-CT(R) Sr-11)
  • “Air-space/Freight” – SAC 9965 – GST 18 % (Sr-9)

• Exemption window for outbound air-freight: 25-Jan-2018 → 30-Sep-2022 (Sr 19A Not. 12/2017-CT, mirrored as Sr 20A in Not. 09/2017-IGST).

• Informer-based intel: Certain firms (incl. UWCPL) suspected of –

  1. RCM evasion on import of services (overseas clearance & last-mile)

  2. Artificial bifurcation of full courier charge → large exempt air-freight + tiny taxable component

  3. Un-invoiced clandestine supplies.

• Search authorised (DIN 202401DNN00000560039, dt 15-Jan-24); executed 16-17 Jan 2024 (Panchnama & INS-02).

• Seizure highlights:
  • Overseas ledgers, “No-Billing” data etc.
  • UWCPL uses “CMS” software by CM Infosoft for bookings/accounting.

Page 3 – Industry workflow (out-bound)

1. Pickup/sort → HAWB issued (unique airway-bill no.).

2. Authorised Courier books air-space via IATA; airline issues MAWB.

3. Courier prepares Manifest + files CSB (Courier Shipping Bill).

4. Post LEO, bags delivered to airline. MAWB copy sent to overseas agent.

5. Overseas agent clears customs abroad + doorstep delivery.

Two commercial models:

• Model-1 (“Pre-paid”) – Indian shipper pays all-inclusive to UWCPL.

• Model-2 (“COD”) – Foreign importer contracts overseas courier; Indian leg sub-let; exporter pays nothing domestically.

Page 4 – In-bound flow & COD variants

• Mirror process with overseas courier as shipper; UWCPL (India) as consignee.

• COD definitions for import vs export explained.

Page 5 – Glossary

courier service, airline, custodian (EICI), authorised courier, overseas C&F agent, MAWB, HAWB, Manifest etc.

Page 6 – Customs framework

• Only Registered Authorised Courier may file CEM (Form F) or Courier BE.

GST framework:

• SAC 9968 taxonomy, GST 18 %.

• Import of services deemed inter-state (§7 IGST).

• RCM via Not. 10/2017-IGST.

Page 7 – Time/Place of Supply extracts

• §13 COST – regular & RCM timelines.

• Place-of-supply rules (§12 & §13 IGST) including 2019 & 2023 amendments.

Page 8 – Exemption chronology for air-freight (2018→2022).

• Table summarising yearly extensions (Nil rate until 30-Sep-22).

Page 9 – Investigation: Recorded statements

Manohar Verma – 17-Jan-24 (search)

• Confirms three-leg structure & use of CMS/Tally.

• Admits:
  • RCM not paid on overseas leg (~₹16 Cr invoices).
  • Bifurcation practice; GST paid only on small portion.
  • Cash sales: ~₹14 Cr unbilled (FY 21-22 onward) → est GST ₹2.45 Cr.

Page 10 – Further statements

Manohar Verma – 12-Feb-24

• Decodes internal ledger heads (“Cargo Income”, “Cash in Courier”, “Export Courier”, “Credit in Courier”, “COD” etc.).

• Lists key overseas agents:
  • United Business Express (UK)
  • United Worldwide Courier Inc (USA)
  • DTDC Courier & Cargo UK Ltd.
  • AJ Worldwide Services Ltd (UK)

• Mentions set-off of payables/receivables with overseas agents.

…Pages 11 → 77 – Consolidated Highlights

(For brevity, repetitive tabular data & verbatim legislative extracts are summarised. All RUD references preserved.)

Key Financial Findings (Pages 19-24, 26-32)

1. Import of Services (Overseas clearance & delivery)
   • Assessed taxable value: $17.41 \text{ Crore}$
   • GST @18 % (RCM): $3.134 \text{ Crore}$

2. Exempt-misclassified Air-freight (Apr-18→Sep-22)
   • Mis-bifurcated value: $1.1087 \text{ Crore}$
   • GST evaded: $0.1996 \text{ Crore}$

3. Clandestine Cash Sales (Courier + CHA)
   • Out-bound courier: $34.1093 \text{ Crore}$
   • CHA (authorised-courier only): $0.4673 \text{ Crore}$
   • Cash via E-Com Shipping: $1.0018 \text{ Crore}$
   • GST on 3 sub-heads: $6.4041 \text{ Crore}$

4. Export-proceeds not realised (set-off against imports)
   • Unrealised forex: $16.8547 \text{ Crore}$
   • IGST payable: $3.0338 \text{ Crore}$

5. Total Tax Demand Proposed
   • IGST: $4.3817 + 0.1996 + 3.1341 + 3.0338 ≈ 10.7492 \text{ Crore}$
   • CGST = SGST: each $1.0112 \text{ Crore}$
   • Grand GST: $12.7716 \text{ Crore}$ (pre-adjustment).

6. Voluntary deposits (DRC-03) already made:
   • Tax: $6.2179 \text{ Crore}$
   • Interest: $1.4954 \text{ Crore}$
   • Penalty: $0.0837 \text{ Crore}$

Penal Provisions Invoked

• Main demand: § 74 (1) CGST (+ § 20 IGST) – fraud/suppression.

• Interest: § 50.

• Penalty on taxpayer: § 74 (1); § 122 (1)(i),(x),(xv),(xvi),(xvii); § 122 (2)(b); § 122 (3)(e).

• Penalty on Directors: § 122 (1A) (equal to clandestine-tax) & § 122 (3)(a) (aiding/abetting).

• Possible prosecution: § 132 triggers listed (supply without invoice, bogus invoice, tax collected not paid, etc.).

Compliance Failures Enumerated

1. No self-invoice for RCM (§31 (3)(f)).

2. Non-declaration in GSTR-1/3B (§37 & §39).

3. Incorrect valuation (§15, Rules 27/31).

4. Failure to maintain true accounts (§35 + Rule 56).

5. Violations of Rule 96A (export LUT, forex realisation) & FEMA Master-Direction 16.

Relief Offered

• § 74 (8): Pay tax + interest + 15 % penalty before notice-service ⇒ get reduced penalty.

• 30 days to reply & seek personal hearing before Addl./Jt. Commissioner, CGST Delhi South.

Relied-Upon Documents (RUD 1-32)

• Full inventory listed pages 75-77 (panchnama, statements, ledgers, e-mails, RCM invoices, EICI/Airline data, banks, DRC-03 etc.).

Synthesis / Exam-Prep Insights

1. RCM on Imports: Always issue self-invoice & pay within 60 days (§13 (3)). Failure = interest + equal penalty under §74.

2. Bifurcation Misuse: Exemption 19A for pure air-freight cannot be piggy-backed onto composite courier services.

3. Place-of-Supply Dynamics: Post-Feb 2019, transportation to outside India → POS = destination (§12 (8) proviso) ⇒ IGST only.

4. Evidence Trail: Ledgers + third-party airline/custodian weight-data critical to quantify unbilled outward supply.

5. Director Liability: §122 (1A) (2021-onward) makes beneficiaries of fraud jointly penalised up to tax-equivalent.

6. Forex Realisation: Export of service needs foreign currency within 1 yr (Rule 96A). Non-realisation converts zero-rated supply to domestic taxable.

$\boxed{\text{Total Additional GST Liability (post adjustment) }\approx 12.77\ \text{ Crore}}$

Students should map each demand component to statutory trigger & evidence (RUD) for exam-style case-law analysis.