They were ringing in good business till last month. Now, the Chinese mobile handset dealers are crying foul over crackdown by Gujarat`s Value Added Tax (VAT) officials. Seizures have led to a stock crunch and a few dealers who have got stocks have promptly hiked the price of these phones by more than 10 per cent.

In the last 40 days, VAT officials have seized more than 35,000 Chinese cellphones which were packed in sacks and were being smuggled into the city without paying the tax.

Acting on a tip-off about a large-scale racket involving Chinese mobile importers in Mumbai and Delhi and traders in the city, VAT department seized cellphones worth more than Rs 3.5 cr in the last 40 days and have till now collected more than Rs 88 lakh as taxes and penalty from city-based dealers.

On Tuesday last, a consignment of mobile phones was seized by the VAT officials from an Ahmedabad-bound flight coming from Hyderabad. "Total 12 packets have been seized. We suspect these to be Chinese phones," said VAT officials.

In addition, the officials confiscated three consignments, which were brought to the city in different trains. Also on last Friday seized Rs 49 lakh worth of cellphones brought from Delhi onboard a domestic flight to Ahmedabad.

The parcel of Chinese G-5 model phones was on Indigo flight and from airport was transported in a truck which was intercepted by city police officials and handed over to VAT department.

"The first operation was conducted in Shatabadi Express on April 20 where we found Chinese phones worth Rs 1.5 crore in 177 packets. We also recovered a box full of global positioning system (GPS) devices which are fitted in cars.

The consignment had come from Mumbai and the instruments had International Mobile Equipment Identity (IMEI) number, but taxes were not paid so we collected Rs 57 lakh VAT from the city-based importers," said a senior Gujarat commercial tax department official.

Meanwhile, the city traders have devised a new way to battle the hiked VAT on cellphones.

The Chinese cellphone consignments from Delhi and Mumbai are brought to Ahmedabad through trains and buses but the bills have name and address of traders in Abu or Udaipur in Rajasthan where VAT is still five per cent.

Once in the city, the consignments are not sent to Rajasthan, rather they are sold without bills in local market. The same modus operandi is followed while bring in Chinese cellphones through air cargo.