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2 Ludhiana firms evade VAT worth crores
December, 18th 2013

Punjab excise and taxation department has detected evasion of value added tax (VAT) worth crores by some traders, who had devised a new method to evade tax by showing that they were transporting goods in "non-existent" vehicles. In Punjab, dealers have to pay around 14.5% VAT on such commodities. However, the traders - showing that they were exporting goods to other states as in these cases - were liable to pay only 2% of the goods' cost in the form of central sale tax (CST).

Documents accessed by TOI from the excise and taxation department revealed that two Ludhiana-based firms - Deep Trading Company and Sai Trading Company - in connivance with the department officials deputed at interstate checkpoints, had evaded VAT by showing that they were transporting goods to other states on vehicles which do not exist in records of transport authorities. The firms, dealing in daily provision goods, had shown movement of goods worth Rs 28 crore to Sikar-based dealers in Rajasthan.

Sources in the department disclosed that goods were never sent out of Punjab but whole transactions - right from billing, clearance at department's interstate checkpoints and delivery of goods in Rajasthan - were executed only on paper in connivance with the excise staff and fake vehicle registration numbers were mentioned for such fictitious deals.

Lid was blown off the fraud only after officials at depa2 Ludhiana firms evade VAT worth croresrtment's Patiala headquarters noticed that over two dozen vehicles used to transport goods from Punjab had registration numbers of various places in Rajasthan. The department had written to as many five district transport officials (DTOs) of Rajasthan requesting them to verify owners and status of vehicles being used to transport goods from Punjab.

Excise department officials said that while replies about the status of vehicles' owners were awaited from Rajasthan, one DTO had revealed that at least three such vehicles were "non-existent". Sources said their suspicion was strengthened further due to the fact that the value of each consignment for over 250 tours to Sikar from Ludhiana remained between Rs 9 and 9.5 lakh. Finding irregularities in movement of goods, an inquiry officer has now recommended legal action against the traders.

"As there were no vehicles, the question of goods moving to Rajasthan from Ludhiana after crossing information collection centres (ICC) at interstate borders does not arise...These bogus entries are an irregularity of criminal nature. An FIR for committing fraud on state by forging documents should be lodged against the is almost impossible to find such evidence...remaining entries in the list are similar in nature so the dealer shall be assessed as early as possible," wrote S S Bangar, assistant excise and taxation commissioner (headquarters), who has conducted the inquiry.

When contacted, Bangar said, "We have already initiated action against Deep Trading Company and Sai Trading Company. While the former had shown export of goods worth Rs 17.21 crore, the latter had shown that they had sent products worth Rs 11.23 crore to Rajasthan."

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