Massive VAT scam: Sales Tax department unearths the scam involving betel nut traders of Maharashtra, UP

•  The department had conducted raid at godown of betel nut businessman 

By Dheeraj Fartode

Raids conducted by a joint team of Maharashtra Sales Tax department and Uttar Pradesh Sales Tax department has unearthed tax evasion worth crores of rupees, involving five betel nut traders and transporters.

“The searches were carried following raids by UP Sales Tax department in Kanpur in past week and FIRs would be filed in the case,” a senior officer of Maharashtra Sales Tax department confirmed. Revealing the modus-operandi, the officials stated that transporters and traders apparently prepared bogus invoices posing as the ‘seller’, created many paper companies and claimed set-off in return.

Team of Sales Tax department, Kanpur arrived in Nagpur on Monday after the department had conducted raid at godown of betel nut businessman D K Jain in Kanpur last week. The department found thousands of sacks full of betel nuts, without proper documentation.

The businessman had submitted bills of traders and transporters of Nagpur. The bills showed addresses of Vikrant Transport, Nagpur, Gupta Transport, Nagpur, Balaji Traders, Nagpur and Tirupati trading company, Nagpur.

During the searches, the joint team found manipulated bills from Vikrant traders and Tirupati trading co. However, address of Balaji traders turned out to be fake as no such establishment was present at the mentioned address.

Owner of Vikrant traders has signed as witness on papers of bogus address of Balaji traders. The joint team was surprised when the team had gone on at house no 1435, Wardhaman Nagar, the address furnished by Tirupati trading company, as the company was actually situated at house no 1235. Owner of the house told the team that owner of Tirupati trading company had taken the house on rent for residential purpose and his wife was living in Nasik.

A official said that as the traders and transporters have shown fake bills hence, the department will register FIR against them for VAT evasion.

Nagpur is hub for betel nut business

According to Sales Tax department, centrally located Nagpur is a hub for betel nuts business. Around 100-200 trucks arrive in Nagpur everyday from Karnataka and Kerala. Maximum trucks are parked in Maskasath and Wadi area where most of betel nuts are stored in godowns. Betel nuts of every quality ranging from best to worst is mixed here and then, is transported to North India including states of Uttar Pradesh, Bihar, Jharkhand, Chhattisgarh, Himachal Pradesh where Gutkha manufacturing companies are located. As VAT is not applicable on Chilli and turmeric business hence, the businessmen often pass on betel nut in the name of chilli and turmeric. They also claim false credits, hide turnover, and even use hawala transfers in the business, the officials claimed.

Why Nagpur Sales tax officials ignored this scam ?

Sales tax department Nagpur had not conducted any raid on betel nuts businessmen for the past 10 years. Last raid was conducted in 2001 at on a godown located on Central Avenue. Sources said that officials of the department have idea about the business but, they seldom worried about it. Overall the VAT evasion and its detection is so cumbersome, it is very difficult for many officers to detect the fraud, trace the money-trail, pin-point the culpability, unearth the conspiracy and finally successfully prosecute the scamsters by convincing the police and law officers, who too find it difficult to understand modus operandi of VAT evaders.