Govt takes on bogus companies, 750 registration cancelled in last one month
19 Aug 2014 5:40 AM IST
Delhi government’s trade and tax department has taken a special initiative to trace and book bogus dealers and companies operating in the city.
In last one month, the department has identified 750 such bogus companies and cancelled their registration certificates and managed to get around Rs 100 crores as taxes from the beneficiaries.
‘The department has formed eight inspection teams, each comprising of three members. The teams are collecting data and trying to unravel the well-knitted racket these bogus dealers and companies have been running in the city,’ said a senior VAT (value-added tax) officer. The enforcement branch of the department has conducted number of raids in the city and managed to trace and cancel registration certificates of 768 such companies.
‘These are public, private and partnership firms which operate only on papers. They had given false address in their registration papers,’ said the officer adding that ‘most of bogus companies have given the address of outer or east Delhi.’ Explaining about the modus operandi of these companies, the officer said under VAT system, the bogus dealers issue fake tax invoices on which the genuine dealers claim input tax credit, thereby reducing their liability to pay VAT. These companies operate between real manufacturing companies and real buying companies.
These bogus companies, on papers, sell products of 100 more bogus companies and then again to 100 more bogus companies. This process is followed around six to seven times before it reaches the real buyer. ‘Through this process, fake invoices are being produced wherein the real companies get VAT benefits, causing huge losses to the exchequer’, the officer added.
In last one month, the department has identified 750 such bogus companies and cancelled their registration certificates and managed to get around Rs 100 crores as taxes from the beneficiaries.
‘The department has formed eight inspection teams, each comprising of three members. The teams are collecting data and trying to unravel the well-knitted racket these bogus dealers and companies have been running in the city,’ said a senior VAT (value-added tax) officer. The enforcement branch of the department has conducted number of raids in the city and managed to trace and cancel registration certificates of 768 such companies.
‘These are public, private and partnership firms which operate only on papers. They had given false address in their registration papers,’ said the officer adding that ‘most of bogus companies have given the address of outer or east Delhi.’ Explaining about the modus operandi of these companies, the officer said under VAT system, the bogus dealers issue fake tax invoices on which the genuine dealers claim input tax credit, thereby reducing their liability to pay VAT. These companies operate between real manufacturing companies and real buying companies.
These bogus companies, on papers, sell products of 100 more bogus companies and then again to 100 more bogus companies. This process is followed around six to seven times before it reaches the real buyer. ‘Through this process, fake invoices are being produced wherein the real companies get VAT benefits, causing huge losses to the exchequer’, the officer added.
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