State Taxes and Excise conducts inspection of three firms at Kala Amb

Investigates tax irregularities

Shimla, April 29 – The department of State Taxes and Excise is conducting inspection of three firms at Kala Amb area of Sirmaur District today. These three firms are part of a network of approximately 300 firms spread across five states.  The network of 300 firms 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 insignificant portion of their tax liability through payment of cash. They have been disclosing that most of the liability of tax have 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 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 very short span of time and getting themselves cancelled. The entities at the beginning of supply chain have never made payment of the tax to the government. Moreover, a significant number of entities at the beginning of supply chain have been cancelled 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. Primafacie it appears that two entities with the support of third entity has availed and passed on ineligible ITC of upto Rs. 250 crores to other taxpayers. Further,  action against the said network would be taken as per provisions of the  GST law.