HP tax authorities uncover complex web of transactions
Shimla, April 29
On Saturday, the State Taxes and Excise Department conducted raids on three firms located in the Kala Amb industrial area of Sirmaur District, Himachal Pradesh for their alleged involvement in tax irregularities. According to a spokesperson from the department, these firms are part of a larger network of around 300 entities spread across five states. The network has conducted transactions worth more than Rs. 8300 crores, while availing and passing on input tax credit of over Rs. 1500 crore.
The spokesperson further added that the firms in this network have been paying only a small fraction of their tax liability in cash and have been claiming that they have discharged the rest of the liability through Input Tax Credit. The department’s Economic Intelligence Unit (EIU) conducted data mining across various data sources and concluded that the network created a complex web of transactions to pass on fake or ineligible input tax credit.
The department found that newly registered entities in the network were disclosing large amounts of transactions in a short period and getting themselves cancelled. Many entities at the beginning of the supply chain had not paid taxes to the government, and several of them were retrospectively cancelled by the tax authorities, indicating the involvement of fake paper transactions. Additionally, some of the partners in these firms were previously found to be engaged in tax evasion activities, leading to the imposition of demands by the department.
Also read Himachal Pradesh excise crackdown on fake firms
Around two dozen officers from three districts inspected three different locations in Kala Amb during the raids. Preliminary investigations suggest that two entities, with the support of a third entity, availed and passed on ineligible Input Tax Credit worth up to Rs. 250 crores to other taxpayers. The department has stated that it will take action against the network in accordance with the provisions of the GST law.
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