7 Gurugram ETOs charge sheeted for bogus tax refunds

GURUGRAM, HARYANA, INDIA(TIP): Seven Excise and Taxation Officers (ETOs) posted in Gurugram helped nine firms siphon off funds worth over Rs 100 crore from the state exchequer via bogus tax refund claims. A FIR in this regard was filed in July. Subsequently, ETOs Narendra Dhanda and Shobhini Mala were placed under suspension after a preliminary probe.

Now the government has also suspended ETOs SK Singh, Vijender Dhull, Vikas Prashar, Sanjeev Saluja and Suneela Singh. All seven have been charge sheeted under Rule 7 of the Haryana Civil Services (Punishment and Appeal) Rules, 2016, which can lead to their dismissal and demotion.

As the scam unfolded, investigations into the role of two Gurugram firms further revealed the involvement of 15 firms in Panipat district and two in Kaithal. These firms too submitted bogus claims for tax refund during transition from VAT to GST.

In view of the inter-state ramifications of the scam, CM Manohar Lal Khattar has ordered that the case be handed over to the State Vigilance Bureau (SVB) as recommended by the Additional Chief Secretary, Excise and Taxation, Sanjeev Kaushal.

Modus operandi

Unscrupulous dealers would float a fake firm, procure bills of a commodity, such as cigarettes taxed heavily (21 per cent during VAT regime and 28 per cent under GST now), from within the state. They would show the sale on paper to a firm in another state (also fake) with 2 per cent central sales tax (CST), using Form C. Having thus ‘paid’ 21 per cent VAT and ‘charged’ 2 per cent CST, the trader would fraudulently claim 19 per cent refund from the government. For example, on a sale of Rs 10 crore, a dealer would claim a refund of Rs 1.9 crore.

The ETOs’ role

Form C was issued to bogus firms by ETOs even when they were not entitled to do business for which they were issued the form. Without the form, the firms could not have shown fake sales. “It was found that two Gurugram firms, Vipin Enterprises and Uma Traders, had created a web of seven more bogus firms — 15 in Panipat and two in Kaithal — and duped the government of nearly Rs 50 crore each by fake claims.

“The role of the Excise and Taxation Officers came under the scanner because they helped the bogus firms commit the fraud by issuing Form C. In some cases, even the address mentioned in their registration certificates were non-existent,” Additional Chief Secretary Kaushal explained.

Praising Additional Excise and Taxation Commissioner Vijay Singh, Joint RTC Rajiv Chaudhary and DETC Ashok Panchal, he said that the government had decided to issue commendation certificates to them for unearthing the scam.

REFUND ON FAKE BILLS

1 A fake firm would procure bills of a commodity like cigarettes taxed heavily

2 It would show sales outside state and claim refund for VAT paid & CST charged

3 It would procure bills from distributors, who generally sell stocks to retailers without bill, charging 1% of the bill amount

4 A firm with bills worth Rs 1 cr was presumed to have paid Rs 21 lakh VAT though all it had paid was a mere 1 per cent

5 The bogus firm would show sales to another bogus dealer outside Haryana against Form C and charge 2 per cent CST

6 Sale on CST is permissible only against Form C. The erring ETOs would issue the form knowing well the firm did not exist

7 The firm would then fraudulently claim Rs 19 lakh as refund.

(Source: Tribune, India)