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Over Rs 650-crore tax fraud unearthed
August, 21st 2009

In the biggest tax evasion fraud of this financial year, the State Excise and Taxation department has unearthed a bogus billing scam to the tune of Rs 656.71 crore by three renowned Ludhiana firms Singhania International, Shree Vallabh Exports and Krishna Ispat Limited.

As per investigations, the firms all of which deal in the iron and steel business were making bogus billings for the several years and were claiming VAT refunds, causing huge losses to the state exchequer.

The tax liability amounts to around Rs 25 crore; if the penalty amount is added, it crosses Rs 75 crore.

Excise and Taxation Commissioner, Punjab, A Venuprasad said: The amount might go up even more, as this is the information we have recovered in our preliminary inquiries. So far, 19 suspected dealers have been traced who made sales to Shree Vallabh Exports that have been proved bogus.

The total number of dealers tracked till now is 33 in all firms, and the number might cross 50. These firms made bogus sales and purchases to claim bogus input tax credit (ITC) on their accounts. Dealers are from all over the state.

Assistant Excise and Taxation Commissioner (AETC) Rishipal Singh unearthed the fraud by Shree Vallabh Exports while AETC (Mobile Wing) T S Sidhu tracked down the other two companies.

Sources said both officials had faced stiff political pressure to arrive at a compromise. The Excise team was also attacked by Krishna Ispat Limited employees two days ago.

In the billing records, registration numbers of trucks that supplied the material were provided. Later, when the details were cross-checked at the District Transport department, the vehicles were found to be scooters, motorcycles, Maruti 800 cars and three-wheelers which could not have carried the quantity of material as shown in the bills.

Shree Vallabh Exports is a firm registered with the department as a merchant exporter since August 1992.

Venuprasad said: When inspection was conducted, the company had shown stocks worth Rs 83 crore, while in reality there were stocks worth only Rs 10 crore.

Singhania International and Shree Vallabh have billed bogus sales and purchases amounting to Rs 81 crore and Rs 94 crore respectively for 2008-09. So far, the department had also paid Rs 2.5 crore as VAT refund to Shree Vallabh Exports.

Venuprasad added that any other trader or manufacturer dealing with the above mentioned companies should henceforth exercise caution as they might land in trouble because of these firms.

Bills need to be checked thoroughly by companies before making any supplies to these companies.

Total tax fraud in 2008-09: Rs 100 cr

Bogus billing fraud is not a new phenomenon in Ludhiana. In the last one year, total tax losses due to bogus billing from Ludhiana alone would amount to Rs 100 crore, Venuprasad said.

He added that informers were invited to provide the department with information on more such scams.

Cash rewards will be handed out, depending upon the quality and quantity of information.

Yet another scam discovered last month

In a fraud uncovered last month, three firms were identified among which one had no existing office at the site mentioned in the excise records.

While the other two had offices, no stocks as shown in the records were found.

All were dealing in the hosiery business.

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