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Rs 1,000-cr VAT evasion unearthed in Maharashtra
June, 18th 2012

Raids conducted by Maharashtra Sales Tax department have unearthed tax evasion of Rs 1,000 crore, involving 1,150 hawala dealers and 37,000 beneficiaries.

The checks were carried over last six months and FIRs have been filed in several cases, the Sales Tax Commissioner, Mr Sanjay Bhatia, said.

The official attributed the accomplishment to the computerisation of the department. The department is ahead of Commercial Tax departments across the country as far as computerisation and effective e-Governance initiative is concerned, he said.

Of the total amount, Rs 400 crore had already been collected and the process to collect the remaining amount is underway, Mr Bhatia said.

The department formed a special cell called Economic Intelligence Unit, three years ago. It looks into cases of dealers claiming false credits, hiding turnover, and even hawala transfers.

Hawala entails making bogus invoices to allow a trader to claim tax credits. In this racket, the hawala operator, posing as the seller, exists only on paper and gets a cut in return.

Mr Bhatia mentioned that some beneficiaries had even dragged the department to the Bombay High Court challenging the provisions of VAT Act, but the transparency and handling of voluminous transactions with precise accuracy, as a result of the IT initiative, led to the court upholding the actions of the department. The department has sent notices to the dealers and have given them an opportunity to make payment and escape actions like prosecution.

He further explained that police complaints against 125 dealers had been filed before the Special Economic Offence Wing of police, assisting the Sales Tax department at Vikrikar Bhavan, Mazgaon and around 25 FIRs had been filed.

More police complaints under Indian Penal Code against Hawala operators and the beneficiaries are in the offing.

Mr Bhatia added that the hawala dealers defrauded the State Government revenue of Rs 1,000 crore through incorrect VAT claim of input tax credit by their beneficiaries. The list of 1,150 dealers has been published on the departments website

The official pointed out that the Nagpur Bench of Bombay High Court had given 45-day police custody to a chartered accountant who aided these hawala dealers.

He further added that even the Income Tax department had used information from the Sales Tax department to raise demands of income tax evaded due to use of hawala bills for either reducing profit by accounting bogus turnover of purchases or showing fake expenses.

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