The excise and taxation department has served notices to two city-based chemical firms for evading value added tax (VAT) worth Rs. 2.89 crore by producing fraudulent Input Tax Credit (ITC).

Sources said the firms, New Bhagat Chemicals and Jain Impacts, both at New Shivaji Nagar opposite Focal Point, had been served demand notices for evading tax by producing fake Input Tax Credit (ITC) for three years.

"The department had conducted inspections of these two firms owned by the same person in May 2012. A total of six assessments were done during this process. After completing all formalities, the department on Friday served demand notices to these firms," sources said.

"The firms have been asked to deposit the amount within a period of one month, failing which the department will initiate process to recover the same unless they file an appeal against the notices," they added.

The demand notice has been served by excise and taxation officer Ravinandan Sharma.

When contacted, assistant excise and taxation commissioner HPS Ghotra did not reveal the name of the owner or other details about the notices, but said he was aware of the notices, which had been served as per the provisions of law..