Traders looking for loopholes in the tax system have found that evasion of Value Added Tax (VAT) is easy with the introduction of e-Sugam by the Commercial Tax Department.
Under the e-Sugam (online process for registering commercial taxes like VAT), a trader registers his consignment invoice and receives a number. The number obtained is produced at the department’s checkpost or shown to officials randomly inspecting vehicles transporting goods.
According to the modus operandi, unscrupulous traders after ensuring that the consignment reached the destination cancel the transaction filed under e-Sugam.
Thus dishonest traders have been using the duration of delivery of goods for evasion purposes. Sources in the Commercial Tax Department said a dealer can cancel the consignment invoice without drawing the attention of the department as its validity is for 48 hours. A trader in Hampankatta, who is privy to such practices, said such traders cite reasons like ‘mistake in invoice, ‘failure in transportation’ or ‘unavailability of vehicles’ for cancelling the consignment. Commercial Tax Department Joint Commissioner (enforcement) M Mallayya said the department can only act on such fraudulent evasions when there are specific complaints.
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