Surgical strike on tax evaders: Areca dealers face the heat

Raids on 21 dealers in coastal districts; fake traders were created, fake tax invoices generated to help them claim input tax.

Published: 25th November 2016 03:15 AM  |   Last Updated: 25th November 2016 03:15 AM   |  A+A-

Express News Service

MANGALURU: The enforcement wing of Department of Commercial Taxes busted a huge tax evasion racket by carrying out ‘surgical strikes’ on areca dealers in Sirsi, Yellapur, Siddapur, Puttur, Beltangady and surrounding areas.

The raids on dealers jointly conducted with help of officers of commercial taxes, South Zone, Bengaluru, had begun on Tuesday, sources told Express. Additional Commissioner Mahadev H R confirmed the raids on areca dealers and said `50 lakh was recovered as penalty for tax evasion.

As raids on 21 dealers continued across the coastal districts, the department expects that the penalty would increase five to six times as it is estimated that 40 per cent of total areca production is sold directly without paying commercial tax. Under the modus operandi adopted this time by unscrupulous dealers, not only fake bills were raised but ‘input tax’ also was claimed from government.

Fake dealers were created in Sirsi and Puttur and fake ‘tax invoices’ were generated. A tax invoice is a legal document issued by a registered dealer (seller) to another registered dealer (purchaser), not a consumer, in order to recognise the transaction.

With help of such tax invoices, e-sugam receipt was generated without the actual delivery of goods taking place.

Based on such fictitious tax invoices, dealers claimed input tax from the government. This dealt a double blow to government as dealers were evading tax and claiming input tax from government. A team led by Joint Commissioner of Department of Commercial Tax (enforcement) B A Naniappa conducted a detailed survey.

Sources said Naniappa, on assuming charge, had stepped up vigilance preventing dealers from dispatching multiple loads of areca on the basis of a single document (e-sugam).

Unable to tolerate the strict vigilance, dealers adopted the ingenious modus operandi, sources told Express. Mahadev said the raids by 15 teams will continue on the basis of input tax claimed by dealers.

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