Six tainted road contractors now under sales tax scanner

The department is issuing notices to the contractors asking for information on how much raw material they used for reconstruction. This information, department sources said, would be tallied with the Brihanmumbai Municipal Corporation’s (BMC) records.

laxman.singh@hindustantimes.com

The Department of Sales Tax is issuing notices to the contractors asking for information on how much raw material they used for reconstruction. (HT FILE PHOTO)

The six contractors named in the multi-crore road repair scam may have also been evading taxes. The Department of Sales Tax has now initiated an inquiry to find out how much tax was evaded.

Sales tax commissioner Rajiv Jalota declined to comment on the issue, but another official said the contractors got away paying less tax by manipulating the quantity of construction material they bought.

The department is issuing notices to the contractors asking for information on how much raw material they used for reconstruction. This information, department sources said, would be tallied with the Brihanmumbai Municipal Corporation’s (BMC) records. The rules require the BMC to pay 2% as sales tax, while the contractor pays 3% per contract on the materials they buy to repair roads — such as cement, concrete, bricks, asphalt, sand, metal and drain covers .

The six contractors are back in focus, as in the past three years, they bagged most of the road repair contracts. In July this year, HT reported about how road works worth Rs4,259 crore was done by just these six contractors.

“During payment of sales tax, the contractors show less quantity of purchased items so they have to pay very less tax,” said the officer, not wishing to be named.

“During road construction, they use a large amount of materials. For instance, if 1,000 cubic metres of concrete is used for laying a road surface, the contractors bring it down to 700 on paper. They don’t pay for 300 cubic metres and cause a revenue loss to the government,” the officer said.

The six contractors --KR Construction, J Kumar Infraprojects, RPS Infraprojects, RK Madhani, Mahavir Infraprojects and Relcon Infraprojects — are already facing charges under several sections of the Indian Penal Code for criminal conspiracy, producing false documents and cheating.

The BMC has also started the process of blacklisting these contractors, which bars them from participating in any civic contract awarded in the future.

“The divisional department is preparing notices to send to the contractors to furnish the details of items purchased during road reconstructions and repairs in last three years. By checking the records they will find out the amount of evasion of sales tax,” said a source.

In past, these contractors have been served notices by the sales tax department for nonpayment. Documents available with HT show that notices have been sent for evasion of sales tax from 2010 to 2012.