Tax Irregularities: Excise Department raids three firms in Kala Amb
State Taxes and Excise Department conducted raids on the three firms in the Kala Amb industrial area of Sirmaur District of Himachal Pradesh on Saturday who are indulging in tax irregularities.
The spokesperson of the department said that firms are part of a network of approximately 300 firms spread across five states who have conducted transactions of more than 8300 crores having availed and passed on input tax credit of more than Rs. 1500 crore.
The firms in the network have been discharging an insignificant portion of their tax liability through the payment of cash. They have been disclosing that most of the liability of tax has been discharged by them through Input Tax Credit. The Economic Intelligence Unit (EIU) at the State Taxes and Excise headquarter did the data mining across various available data sources and arrived at the conclusion that a complex web of transactions among these 300 entities was created to pass on fake/ineligible input tax credit.
As a pattern, these newly registered entities were disclosing huge amounts of transactions in a very short span of time and getting themselves canceled. The entities at the beginning of the supply chain have never made payment of the tax to the government.
Moreover, a significant number of entities at the beginning of the supply chain have been canceled retrospectively by tax authorities, implying the declaration of fake paper transactions by these entities. Further, it is worth mentioning that some of the partners of these firms were found engaged in tax evasion activities earlier also, wherein demands were imposed by the department.
The inspection is being carried out by around two dozen officers from three districts at three different locations in Kala Amb. Prima facie it appears that two entities with the support of a third entity have availed and passed on ineligible ITC of up to Rs. 250 crores to other taxpayers. Further, action against the said network would be taken as per provisions of the GST law.
