HYDERABAD: Vigilance and Enforcement sleuths have detected large-scale tax evasion by hundreds of retailers selling mineral water and soft drinks of a leading multinational company.

With VAT regime in place, the sale of most commodities attracts multi-point tax.

While dealers having a business turnover of less than Rs. 5 lakhs need not register themselves with the Commercial Taxes Department, those with turnover between Rs. 5 lakhs and Rs. 40 lakhs need to register for turnover tax (TOT) and those above Rs. 40 lakhs for VAT.

MNC's turnover

Officials began looking into tax compliance by retailers after it was found that the MNC had a sales turnover of Rs. 380 crores during 2005-06 in the State.

Initial reports from just three districts -- Karimnagar, Ranga Reddy and Nellore -- showed that evasion was close to Rs. 1 crore.

"This is only the tip of the iceberg and suggestive of many more retailers suppressing turnover details and evading tax," official sources told The Hindu .

They said that even if one went by a very conservative estimate of tax evasion of 10 per cent (about Rs. 4 crores), preliminary reports suggested the non-payment of tax to be of a very high order.

Startling revelations

Investigations showed that in many instances dealers had not registered themselves despite achieving a turnover of more than Rs. 40 lakhs.

"The revelations are startling though the outlets selling them appear to be simple cool drink shops," the sources added.

Even an ordinary outlet on the city outskirts had a sales turnover of Rs. 10 lakhs on two products of the MNC.

With the detection of huge tax evasion for mineral water product and soft drinks of a single company, officials have broadened the investigation to include similar products of other MNCs.

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