Excise Dept smells heavy tax evasion in online shopping

  • Ravinder Vasudeva, None, Jalandhar
  • Updated: Jun 15, 2015 20:21 IST

The trend of online shopping, that has caught the fancy of residents, has started giving a tough time to the state excise and taxation department, with its officials smelling heavy loss to the state exchequer in the form of evasion of various taxes.

Having no specific law as of now to closely monitor online shopping, the department officials are on their toes to ascertain the possibilities of tax theft in delivery of items to consumers.

Hardeep Kaur Bhawra, assistant excise and taxation commissioner (AETC), mobile wing, Jalandhar, who is steering the interrogation underway to assess the high possibility of damage to the state exchequer owing to this online channel in Jalandhar zone, said the department had received reports of heavy tax theft by shops and firms ordering cheap material online by becoming consumers.

"In Punjab, it has become a common practice wherein prospective sellers purchase different goods as consumers online. The goods are then being sold without paying a single penny towards taxes mandatory on sale of these items. In order to assess the loss, we are investigating records of different firms. The need of the hour is to have a tough law for online shoppers," said Bhawra.

In order to tighten the noose around online shopping portals, the excise and taxation department, in the past three days, conducted raids on the premises of three companies - Flipkart, Snapdeal and Amazon.

In these inspections, the department officials have seized certain documents, including bills and other items, to gauge any tax evasion or loss to the state exchequer on account of sale and purchase of various items through the online mode.

The modus operandi

According to department officials, as per online shopping law, there is a bar on purchase of item by the consumer, the most common way to evade taxes is to buy the same items in the name of others. The shopkeepers thus sell those items in black without paying VAT and other mandatory taxes.

Department high-ups said companies had been making certain purchases from the state, but in order to charge minimum taxes from the customer, were showing the purchases to have been made from other states where the tax is low as compared to Punjab. This is resulting in evasion of advance tax, said sources.

Jalandhar being the hub of sports market, in department investigation, sources said, it has been found that sports material is being picked from Jalandhar, but some companies are showing the purchase to have been made from Uttar Pradesh, where there is no tax on sports manufacturing.

"In order to sell the items at cheaper rates to attract more shoppers, Punjab, that would have received taxes for manufacture and sale of sports goods, is not earning even a single penny," claimed a few officials.

Sarojini Gautam Sharda, deputy excise and taxation commissioner (DETC), Jalandhar, said teams led by the the AETC mobile wing were studying different aspects of online shopping.

"Once we are done with the investigations, further course of action would be decided as per law," she said.

Sources said similar investigations are being undertaken across the state to check tax evasion when it comes to online shopping.

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