Karnataka Lokayukta police on Tuesday, December 27, conducted searches in 37 locations across the state, including the premises of 13 commercial tax offices and 24 manufacturers and dealers. The searches were related to companies involved in the manufacturing, trading, and selling of tobacco and pan masala products and their alleged connections with commercial tax officers. According to a statement issued by the Karnataka Lokayukta, these businesses, in collusion with commercial tax officials, have been avoiding paying taxes, leading to wrongful losses for the government's exchequer.

During the searches, it was discovered that many manufacturers had not kept proper records of their purchases of raw materials, expenses, and sales of finished products, which is a violation of GST laws. It is believed that commercial tax officers may have knowingly neglected these violations. “This is not possible without the collusion of commercial tax officers. Some of them did not even have GST numbers and the stocks did not match the books of accounts,” the statement said. The Indian Express reported that the searches revealed large stocks of goods without inventory or accountability. The commercial tax officers of the relevant jurisdictions were informed of the findings and instructed to take appropriate legal action and report compliance.

In addition to searching godowns in 20 locations, the Lokayukta police found that traders were selling these goods without maintaining proper records or paying GST. This is thought to have been possible only with the collusion of commercial tax officers. Some of the traders did not even have GST numbers, and the stocks did not match the books of accounts. The offices of other commercial tax officers were also searched as part of the investigation into their alleged connections with these traders and manufacturers. It was revealed that these officers had rarely visited or inspected the manufacturing units or traders to collect taxes as required by law, which contributed to the wrongful losses for the government exchequer. A number of incriminating documents, including evidence of tax evasion, false GST credits, and irregularities in godown stocks, were also seized during the searches.