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FIR by sales tax dept upheld
July, 03rd 2010

In a major boost for the sales tax department, the high court has upheld criminal proceedings initiated by it against an Akolabased edible oil trader for allegedly forging documents related to transactions to the tune of Rs 96 crore for availing tax exemption.

The department, while raising tax liability of Rs 10 crore against the firms M/s Dayal Agro Products and M/s Dayal Industries headed by Pawan Bacchuka had also filed a first information report (FIR) against the promoter for submitting fake documents.

Bacchuka had, however, challenged the criminal proceedings saying that it was only a tax liability which he was ready to pay, say sales tax department officials.

However, the court in a recent verdict rejected the plea for quashing the FIR. The case pertains to investigations
carried out in 2008 when the firms sales to its agents were probed. The firms showed huge quantities of goods (edible oil) sold to its agents and branches outside the state.

The sales tax (now value added tax) provisions allow exemption from the levy when the goods are sold to an agent or a branch of a firm as it is considered a transaction within the same entity.

However, the onus of proving such a transaction lies with the dealer who also has to submit a declaration under Form F which is issued by the commercial tax officer or sales tax department of the respective state in which the sale is made.

However, on investigations, it was found that not only fake Form Fs were submitted but the transport receipts showing the despatch of consignments were forged too.

The investigating teams cross-checked the documents with various transporters and it was found that out of 190 receipts, 140 were not issued by them at all. At the same time, it was also confirmed from the respective departments that the forms were not issued at all.

This pertains to the period from 2001 to 2008. As a result, tax has also been worked out according to the rates in the sales tax regime as well as value added tax which came in to effect from 2005 onwards. The department plans to go ahead with the remaining proceedings.

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