Delhi’s top businessmen have evaded value added tax (VAT) worth a staggering Rs2,000 crore in the last one year. This startling revelation has been made during the assessment of 160 bogus traders of the city. According to the authorities, the amount to the evasion is just the tip of the iceberg as it may well exceed several thousand crore rupees.
The Trade and Taxes Department (TTD) of the Delhi Government has already cancelled the licences of 150 fictitious companies and has already started lodging criminal cases against them. The evasion of Rs2,000-crore VAT during the past one year is just the beginning of a maelstrom and may in all probability spiral into a major scam in the national Capital once the investigations are over. VAT was introduced in the Capital in 2005.
According to a preliminary assessment by the VAT department, the amount of tax evasion may be estimated around Rs2,000-Rs5,000 crore in a year. Traders have been found to use bogus receipts to accept and make transactions thereby evading the taxes to the State exchequer. Sources claim that if the tax evasion is estimated at Rs2,000 crore from just 160 bogus dealers during the past one year, the total evasion of tax since 2005 may be between Rs20,000 crore and Rs25,000 crore. Raids are constantly being conducted by the enforcement team to nab more of such evaders whose numbers could run in thousands.
Prashant Goel, Commissioner, Trade and Taxes, told The Pioneer that the tax evasion of Rs2,000 crore has been detected after physical verification of 160 big dealers whose companies have been found to be fake. “We have cancelled the licences of these companies and are taking legal proceeding against them,” he said.
Goel said that the evasion of Rs2,000 crore VAT during the last one year is only the indication of a major scam. The Government collected Rs18,000 crore through taxes in 2013-14. Though the department has cancelled licences of 160 traders only, more than 2,000 top businessmen are likely to be involved in this racket with the number likely to increase during the course of the ongoing investigation.
The Pioneer investigation revealed that Guddu Trading Company, registered with VAT department is functioning from slum area in Kalkaji. Three companies having turnover in crores of rupees are running from a single room in Tilak Bazar in Walled city area. Investigations also revealed that most of the companies are being run from slum and unauthorised colonies.
When this correspondent went to verify addresses at different places, these companies were found non-existent and even local residents of the area were not aware of these companies.
Goel said that the practice of tax evasion has become phenomenal in the last few years. The bogus dealers secure registration on the basis of wrong credentials and then disappear issuing wrong invoices. The department has carried out extensive surveys on these bogus dealers during the current financial year. The entire city of Delhi is dotted with premier trading destinations such as South Extension, Kotla, Rohini, Shalimar Bagh, Kingway Camp, Timarpur, Mukherjee Nagar, Model Town, GT road industrial area, Kamala Nagar market and Uttam Nagar that are infested with fake dealers involved in tax evasion. Most of these companies deal in plastic material, iron steel, plastic raw material, timber, metals and retails trading.
This ongoing huge tax evasion racket could be unearthed only due to the computerisation of the operations of Delhi Government’s Trade and Taxes Department during the past one year. It has now enabled its officials to view the accounts by accessing the entire business dealings of each trader through the unique Taxpayer Identification Number (TIN). Now, the entire business operation of each trader having a TIN is visible online to the VAT department officials. This online system has exposed the VAT evasion and also the fake or non-existent dealers. The enforcement teams have also started the verification of the addresses of registered dealers across the city.
Sources said that these evaders float bogus companies and then transfer the financial proceeds to the account of these fictitious companies. The real accounts are maintained in an unofficial slip with the code name ‘Kabootarbill’ on which no taxes are paid. “The most interesting fact about this whole process is that even large amounts of payment are realised through slips,” said the sources.
Another interesting fact of the racket is that these fake dealers procure huge quantities of goods with the stock always reflecting in the computer but the subsequent sale and related voucher are missing. At the same time, when the stocks are high throughout the year, they pay tax that is either less than Rs 10,000 or is shown as nil.
The balance-sheets of these companies are also replete with contradictions. Sources explained that these companies are showing lower sales and higher inventories despite their high turnover. Detailed study of the balance sheet of these companies revealed a massive tax evasion racket and also exposed their modus operandi.
list of bogus companies (found to be non-existent during physical verification)
Aar Dee Trading Company (Chamber No. 206, ABl,D 248/10 laxmi Nagar);RES International (291 Azadpur);Rahul Enterprises (D-64 New Seelampur );Sai Traders (B 18,60 Feet Road, Molarband Extension, Badarpur);Vashisth Traders (B 204m Ram Nagar Shahdara);Sony Traders (29/56, Bhorgarh Narela) India Sales Corporation (29/56 Bhorgarh Narela) Padam Enterprises (267-A Jamia Nagar) Padam Shree International (Plot No.A-114 Block A, opposite Peer Baba Om Vihar, Okhla) Pacific Enterprises (HDFC Bank, 50014/9 New Delhi, Asaf Ali Road) AK Corporation (G-478 Gali No. -19A Batra Faram Molarband Extension, Badarpur) Tycon Agencies (112/2, Sarai Peepal Thala, Adarsh Nagar) lucky Traders (C-12, G/F Ashok Nagar, Shahdara) A & S Enterprises (WZ-19, Ground Floor, Kailash Park, opposite Kirti Nagar) Pankaj Trading Company (WZ-305, lajwanti Garden) Kamal Sales (5/78/1, Gali no 2, lalita Ashok Nagar, Shahdara) SK Traders (7 Hardev Puri, Shahdara) MK Enterprises 2269/71, second floor, Gali Hingabeg, Tilak Bazar Delhi-6) Vinay Enterprises (2269/71, Room No. 5, Gali Hingabeg Tilak Bazar Delhi-6) Mullaniyam International (2269/71 first floor, Gali Hingabeg, Delhi-6) Jai Mata Corp (122/8 Viswas Nagar Shahdara) Guddu Trading Co. (B 477, Bhumiheen Camp DDA Kalkaji); Bharat Corp (4/478 RK Puram) Narmada Trading (2250/111/F Gali Hingabeg Fatak Habhas Khan, Tilak Bazar) Sri Shyam International (1402, third floor, Tilak Bazar)