Indian tax authorities have faulted appliance makers Haier, Godrej & Boyce, and Blue Star for failing to detect fabricated documents from a spurious recycler, according to a 550-page government notice reviewed by Reuters. The companies allegedly relied on these documents to meet green goals and claim tax credits, despite the recycler never performing actual e-waste work. 'The foundational activity of procurement, receipt and processing of e-waste itself is not established,' tax officials stated in their notice. The companies admitted they had not independently verified actual collection, transportation, receipt, dismantling, or recycling of e-waste, which is necessary to claim tax credits.
The three companies wrongly claimed $714,000 in tax credits for recycling services that were never actually rendered, as reported by Reuters. Haier claimed $367,900, Godrej claimed $159,700, and Blue Star claimed $186,600. India allows companies to claim credits for tax paid on services such as recycling, reducing the amount of tax owed on their sales. Penalties for false claims can run up to 100% of the amount claimed. Since 2022, Prime Minister Narendra Modi's government has required companies to recycle a share of products they sell each year, with most meeting obligations by buying compliance certificates from recyclers who do the actual work.
Tax investigators conducted extensive analysis of compliance documentation, including scores of WhatsApp messages and documents, according to Reuters. They correlated recorded sunset times with scenes in photographs furnished for compliance purposes to test authenticity. The notice included photographs showing trucks first laden with e-waste and then empty, but investigators determined these images were digitally altered. For example, one 2024 photograph with a timestamp of 7:43 p.m., 29 minutes after sunset, still showed bright daylight and natural shadows. An executive of recycler WEEE-PRO admitted editing photographs by 'adding a few clouds', but defended the action by stating they were never used for commercial purposes and 'learning Photoshop was not a crime.'
The findings have set off alarm in India's $95-billion consumer electronics market, with many companies launching internal reviews of recycling supply chains, according to Business Standard. Godrej & Boyce and Blue Star said they would respond to the notice and were committed to legal compliance, adding that the recycler concerned had been authorized by the government. Godrej stated it followed all government guidelines for recycling, while Blue Star said it had no reason to believe any irregularity but had stopped dealings with the vendor. Haier India said it would continue to cooperate with authorities and was committed to legal compliance. The incident follows a January warning by the government against "fraudulent certification" issued by spurious recyclers, with concerns about use of false documents prompting tax authorities to widen their investigation through the industry.
