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Sales tax dept busts huge hawala racket
July, 05th 2011

In the largest ever operation of its kind, the Sales Tax department has unearthed a hawala racket with a turnover of Rs 6500 crore, according to the preliminary estimates.

Sanjay Bhatia, sales tax commissioner on Monday said that the firms raided claimed to be involved in the trade of ferrous metals and diamonds. "The total scam with the bank transactions amounts to Rs 6500 crore, of which sales tax related credits are nearly Rs 15 crore. Of this the actual evasion is around Rs1.5 crore," he added.

The rest of the money comes from income, service and excise duty tax evasion.

The 37 firms raided were operational in the tiny offices in 12 places in the city, including Grant Road, Kalbadevi, Opera House and Virar. Some of the offices were being operated from old buildings, within a 40 sq ft area and minus basic facilities like computers.

"Almost all the firms had the bank accounts with a leading private bank. The trade is shown on bank accounts but there is no physical transaction of goods," Bhatia added. The raids were conducted by deputy commissioner (investigation) Sanjay Chaudhar.

Talking about the modus operandi an official said, "The hawala operator issues a bill to the beneficiary, who in turn issues a cheque against the bill. The operator on realisation of the cheque deducts his commission and returns the remaining amount to the beneficiary in cash. Beneficiary then claims Investment Tax Credit (ITC) on such bill though the transaction never took place or the tax is deposited in the government treasury."

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