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Tax evasion racket caught

The Excise and Taxation Department has uncovered a tax evasion scam in the sale of ceramic tiles by producing incorrect details. Floor Tiles were sold out in Punjab, without paying tax.

punjab Updated: Sep 01, 2014 22:34 IST
HT Correspondent

The Excise and Taxation Department has uncovered a tax evasion scam in the sale of ceramic tiles by producing incorrect details. Floor Tiles were sold out in Punjab, without paying tax.

Excise & taxation commissioner Anurag Verma said that a vehicle loaded with ceramic tiles was checked on Barnala-Raikot Road. It claimed that it was carrying ceramic tiles worth Rs.3,01,528/- from M/s. Metro City Tiles Pvt. Ltd., Morbi, Gujarat to M/s. Gupta Sanitary and Hardware Store, in Chandigarh.

The vehicle was being escorted by the car of a "Passer" (private persons indulging in tax pilferage). On checking, it was found that the passer was carrying a parallel set of documents, issued by M/s. H & R Johnson India Ltd., Mumbai (Mah.) in favour of M/s. Maa Mahakali Traders, Jalandhar amounting to Rs.7,56,624/-.

On being questioned, the driver and the Passer stated that the tiles of M/s. H & R Johnson brand were actually going to be delivered to the dealer at Jalandhar but in order to evade tax, bogus/forged transit documents had been prepared in favour of a Chandigarh dealer.

A couple of days later, two more vehicles having registration Nos. RJ07GA-2782 and RJ07GB4289 were impounded, in which similar modus operandi of tax evasion was being adopted. Verma said that a penalty of Rs.11,87,477/- have been imposed on the goods in the vehicle, but no one has come forward to claim the goods as owners till now.

Verma said that in order to go to the root of the problem, the computer data was searched to find out as to how many trucks had transited through Punjab carrying tiles from M/s. Metro City Tiles P Ltd. Morbi, Gujarat to various dealers of neighboring states. It was found that during last one year, 181 trucks had crossed the State carrying goods of M/s. Metro City Tiles P Ltd. Morbi, Gujarat. Value of these goods was more than Rs. 5 crores. Out of this, goods worth Rs.80 lacs have been shown to have been sent to the Chandigarh dealer.

Verma added that with the help of VAT Department, Chandigarh, a statement of M/s. Gupta Sanitary & Hardware Store was recorded. The dealer denied having received any of these goods, meaning thereby the goods amounting to Rs. 80 lakhs were actually unloaded and sold in Punjab and tax thereon was evaded.

Verma said that in the light of denial by both Jalandhar and Chandigarh dealers, the Department did brain-storming as to how to catch the actual dealer who had received the goods. In light of this, the matter has been taken up with VAT Department, Gujarat to provide the details of purchases of ceramic tiles made by Punjab dealers from their dealers. He said that the first interaction with Gujarat VAT Department revealed that during last four years Gujarat dealers had sent ceramic tiles worth about Rs.770 crores to Punjab dealer. In light of this, VAT Department, Gujarat has been requested to give the detailed information of amount of ceramic tiles purchased by Punjab dealers from Gujarat. Gujarat dealers would necessarily have supplied these details to their VAT Department in order to claim concessional rate of tax under CST Act.

They would also have provided 'C' and 'F' forms obtained from Punjab dealers. Once this data is obtained, the returns of Punjab dealers would be compared with it and where Tax has been evaded would be recovered, said Verma indicating that many big fishes will fall in net of tax evasion.