BLW Manpower Supply Chain Hit by ₹4.25 Cr GST Raid

GST Evasion Detected at Railway Contractor Near BLW

The Special Investigation Branch (SIB) of the Uttar Pradesh State Tax Department has detected ₹4.25 crore in GST evasion at a railway contractor's premises near Banaras Locomotive Works (BLW) in Varanasi, after a four-day operation that ran from the night of 18 September to the night of 22 September.

The department has withheld the contractor's and the tent house's names, so the identity of the firm remains undisclosed in the source.

Why the BLW Case Matters

The case matters because BLW — formerly Diesel Locomotive Works (DLW) — is Indian Railways' principal locomotive production unit, and the contractor sat at the labour layer of that supply chain.

The SIB found the firm executed civil construction work and supplied manpower to DLW through the government e-marketplace (GeM), then concealed the manpower supply in its financial year 2025-26 return.

It filed no return for the period in which it was paid more than ₹5.50 crore between April and August, leaving over ₹1 crore of tax unpaid.

Alongside ₹36 lakh of input tax credit drawn on fake bills, ₹46 lakh was deposited during the action.

On the same premises, a catering and tent house firm was found operating on a cancelled GST registration, with no returns filed since July 2025 despite ₹2–2.5 crore of business since 2022-23.

The Real Signal: Contract Structure

The execution signal sits in the contract structure, not the shortfall.

Composite engagements that bundle civil works with manpower on GeM create rate ambiguity between a works contract and pure labour supply — precisely the seam assessing officers now probe.

For a plant like BLW, whose throughput depends on continuous shop-floor manpower, an under-compliant vendor is an operational risk long before it is a revenue risk.

What Contractors Should Take Away

For contractors serving railway, defence and other production units, the takeaway is blunt.

A GeM award confers no compliance cover.

Expect:

- Tighter invoice matching
- Reverse-charge scrutiny
- Harder vendor due diligence from plant procurement teams
- A gradual premium for suppliers with clean, contemporaneous returns over the lowest manpower quote