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Commercial tax department detects Rs 360 crore of illegal transactions by ceramic traders
July, 24th 2014

The state commercial tax department detected illegal transactions worth Rs 300 crore in a raid conducted on 19 ceramic dealers in Morbi and Thangadh. In a unique modus operandi unearthed by commercial tax department, the ceramic dealers detected the illegal transactions which were supposed to be railway receipts(RR) transactions. According to sources, the tax evasion through these transactions could be around Rs 39 crore.

According to officials, a purchaser from outside Gujarat gave an order for ceramics to a local registered dealer who in turn passed on the order to the manufacturer. The manufacturer sent the finished product to the purchaser outside Gujarat but the bills of the same were claimed by the local dealer along with the C form (concessional rate form) in Gujarat itself.

According to commercial tax rules duty on C form is 2% for goods sold inside state while goods directly sold outside the state attract 15% tax. "However in these cases, the dealer itself became the purchaser and submitted C form for Gujarat though the final product was sent outside Gujarat," said a senior official.

The state commercial tax department also unearthed a bogus billing racket in Surat and Vapi of Rs 60 crore during a raid conducted on 15 traders and manufacturers. These manufacturers had claimed input tax credit (ITC) worth Rs 60 crore through fake bills. The commercial tax department recovered Rs 2.9 crore from seven traders while record books of other eight traders were seized.

According to officials 14 manufacturers of yarn, machinery, electrical motor and chemicals used to claim ITC through bogus bills while one Surat-based manufacturer evaded purchase tax. Kottex Industries Pvt Ltd used to buy yarn, which is a taxable commodity, and was selling textiles which is a non-taxable item. "This particular manufacturer was not paying required duty on yarn but was claiming exemption on textile produced. Such transactions of Rs 61 lakh were detected and Rs 21 lakh of tax was recovered from the manufacturer," said a senior official.

This is the first case of purchase tax evasion detected by the commercial tax department.

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