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Sales tax department probe uncovers Haldiram's deals through shell company
July, 02nd 2013

An application to cancel Value Added Tax registration by a Haldiram group company has stirred a controversy. An earlier report by the sales tax department, which now collects VAT, said this firm, Vivek Food Products, existed only on paper.

Haldiram's is a household brand in the city and operates through a number of corporate entities. It faced an inquiry two years ago for allegedly getting VAT incentives by fudging investment figures. The inspection of Vivek Food was part of this inquiry.

However, Rajendra Agrawal, a director in this family-run group, refused to comment on the matter when he was contacted in their office at Pardi Naka Chowk.

The application to cancel the registration obtained in April 2006 mentions that all assets of the firm had been sold, and the operations closed. A registration under VAT is a must to complete formalities such as payment of tax and getting input credit as well.

The officer concerned has forwarded a letter informing about the inspection in October 2010, which found no such business firm existed at the stated address. Another inspection was undertaken a year later.

The registration certificate shows that the firm shifted to a new address in December 2006 - eight months after it was registered. However, a new complication emerged. The officer who purportedly signed the certificate attesting the new address was not even posted in Nagpur on the date he is supposed to have signed it. The firm could not be found even at the new address during one of the inspections, the source said.

Now, a senior officer has written to the concerned personnel in the department seeking details, such as the date of receipt of application for change of address, returns filed and tax paid by the firm so far. On this, the officer has received a written reply from a colleague mentioning another firm named Haldiram Krishi Udyog in its place. This firm has filed returns till late 2012 and paid Rs 6 lakh as tax.

The officer scrutinizing the case has suggested that the firm's registration is liable to be cancelled from the date it was secured. This will be an indication that the firm remained a dummy company. Such firms help businesses route various dubious transactions and evade taxes.


Claris caught dodging tax, pays up

The sales tax department has caught Ahmedabad-based pharma major Claris Life Sciences on the wrong foot. Investigations by the department have found that the company was allegedly involved in routing its stock though a group of dummy firms. The company has agreed to pay tax on the transactions, said a source.

The goods made in the company's Ahmedabad-based unit used to be dispatched to Mumbai. A direct interstate deal would have attracted VAT at 4%. The company showed that the medicines, mainly injectibles, were purchased from Maharashtra-based firms, which were found to have obscure addresses, giving indication that they were dummy concerns. This case involves sales to the tune of Rs 150 crore.

On being cornered, the company agreed to pay around Rs 8 crore tax, including a couple of crores as interest. "Claris was claiming an input credit showing that the firms through which it had purchased the drugs had already paid tax. But a reconciliation exercise showed no tax was paid. Now, the input credit Claris claimed has been translated into a tax liability," the source said.

VAT is a system of taxing the entire chain of transactions, starting from sale at the manufacturer's end till the retailer. However, each time a fresh sale is taxed, the levy paid earlier is adjusted against the current dues, which is called input credit.

Claris has been penalized Rs 10 lakh to avoid filing an FIR against it, since there is a provision to compound the charges instead of going ahead with prosecution. However, a source added that given the apparent fraud, the FIR should also have been lodged by the department.

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