The Punjab excise and taxation department has detected tax evasion to the tune of about Rs 20 crore by Asian Lac Health Food Private Limited, manufacturer of the Bisleri brand of mineral water.
Anurag Verma, excise and taxation commissioner, Punjab, said the company had claimed that during the past four years, it had sent bottled water worth about Rs 40 crore as part of stock transfer to its Haryana branch and had paid no tax on it because as per the Central Sales Tax Act, stock transfer to other states is non-taxable.
Verma added, “Finding the claim dubious, we took up the matter with our counterpart in Haryana. A team of officials was sent to the neighbouring state. The district excise and taxation commissioner, Ambala, reported that the Haryana branch of the firm had shown receipt of stock transfer of only Rs 6.5 crore, which meant that stock transfer of about Rs 33 crore was bogus. Since bottled water is taxable at the rate of 14.3%, the tax component on this bogus transfer alone works out to Rs 4.71 crore.”
Subsequently, the firm’s premises were inspected, he said. It was found that the firm used preform material to manufacture water bottles. For a one-litre bottle, preform costing about Rs 2.45 is used. After going through the invoices, it was found that the cost of preform was about 25% of the bottle’s cost.
Verma said the firm had shown its total sales to be Rs 25 crore in 2013-14. But when reverse calculation was done as per the cost of preform shown as purchased by the firm, the turnover came out to be about Rs 50 crore. It was found that over the past three years, the firm had suppressed its sales to the tune of Rs 95 crore. The tax element on the same works out to be about Rs 15 crore, he added.
The excise and taxation commissioner said the firm was also found indulging in tax evasion by misusing the government’s single-stage taxation scheme. It was detected that the company was selling one-litre water bottles to M/s Metro Cash and Carry at Rs 11 each, but for many other transactions, it had set up a sister concern, M/s Nandan Traders. In those cases, it was selling a one-litre bottle to its sister concern at Rs 8, thus avoiding tax payment on Rs 3.
Verma said investigations in the case were still in progress and a notice would be served on the company soon. He added that since the firm had committed fraud with the department, it would be liable to pay tax, interest and penalty under provisions of the Punjab Value-Added Tax (PVAT) Act, 2005.
Company in denial mode
When contacted, Gopal Poddar, director (marketing), Asian Lac Health Food Private Limited, said, “It’s true that officials of the excise and taxation department took documents from our firm, but we have never indulged in tax evasion. Ours is a small firm, but the department is alleging that we have evaded tax of Rs 20 crore, which is impossible.” He said they would challenge the tax evasion notice, as and when received, with the higher authorities in the government.