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VAT evasion detected from ice units in Gujarat
June, 21st 2011

For years they have been under the scanner of officials for whom the dilemma was how to catch tax evasion in a perishable commodity, a bit of which vaporises every second. Now thanks to a new formula, in a first major operation against ice manufacturers in the state, value added tax (VAT) officials have detected an evasion of Rs 1.1 crore.

A team of 175 VAT officials on Friday raided 40 manufacturing units, of which 21 are in Ahmedabad, while the rest are in Vadodara, Surat, Amreli, Ankleshwar, Navsari and Billimora.

Raids were also carried out in Ahmedabad at offices of those selling ammonia, which is a raw material for ice, and traders supplying iron accessories to these units.

During investigation, as suspected it was found that majority of the units had majorly under quoted their production and were involved in without bill sales.

"As catching tax evasion in an ice unit is tricky, we first surveyed an ice manufacturing unit near SG Highway and monitored their power consumption bills, raw material used and the monthly production.

Later, we devised a formula to know the exact production of an ice manufacturing unit and by comparing it with the declared turnover, we easily detected the tax evasion," said a senior VAT official, adding that ice manufacturers attract a 5% VAT.

Out of the raided units, officials found no tax evasion in four units. Tax sleuths have also recovered account books and documents during the raids which they believe point towards an evasion of around Rs 24 lakh.

"For the first time after VAT was introduced in 2007, a state-wide raid operation was conducted against the ice manufacturers.

Earlier, during a few raids in Surat, we got an average tax evasion of Rs 20,000 from the ice manufacturers there. However, the tax evasion during this operation turned out to be Rs 1.75 lakh per unit. We have already collected Rs 81 lakh as post dated cheques and investigations are on to collect more of evaded tax," the official added.

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