Kerala - Kollam   

Tax evasion by plywood units detected

KOLLAM: The Intelligence wing of the Commercial Taxes Department (CTD) has detected a massive racket involving tax evasion by certain plywood manufacturing units in the State, said Commercial Taxes Deputy Commissioner (Intelligence) V. Murugesh Kumar. A preliminary report put the tax evasion at Rs.26 crore during 2007-2008 alone.

Mr. Murugesh Kumar told The Hindu that a section of plywood manufacturing units based at Perumbavoor in Ernakulam district was suspected to be behind the racket. He said the fraud was carried out through submission of bogus C-forms from other States to the Commercial Taxes Offices to gain permission for inter-State sale of plywood consignments. But, these were sold within the State. The Intelligence wing of the Commercial Taxes Department has seized a large quantity of such C-forms from Commercial Taxes offices in Kollam and Ernakulam districts, he said. A formal report in this regard has been submitted to the Commissioner of Commercial Taxes Paul Antony.

The evasion was carried out by paying Central Sales Tax (CST) instead of Value-Added Tax (VAT). While the VAT on plywood is 12.5 per cent, the CST is only 3 per cent. Plywood manufactured in the State attracts only CST when sold outside. VAT has to be paid for the commodity sold within the State. For movement of the commodity from the production unit, CST or VAT clearance from the Commercial Taxes Department is required.

Investigations by the Intelligence wing showed that the bulk of the CST-paid plywood consignments had not crossed the check-posts of the State. Mr. Murugesh Kumar said the Taxes department had categorised plywood as a “tax evasion-prone commodity” and had been closely following the consignment movement. He said the sleuths suspected a racket when they noticed misspelt words in the bogus C-forms. The bogus C-forms

seized were those shown to be from Maharashtra, Tamil Nadu, Karnataka, New Delhi, Goa, Andhra Pradesh, Puducherry and Chhattisgarh. The sleuths compared the genuine C-forms from these States with the ones submitted at the CTOs and found that the latter had misspelt words and font differences.

The bogus C-forms were found to have been submitted under the Commercial Taxes Department registrations obtained in name of fictitious persons under bogus addresses. A State-level special investigation team has been constituted to conduct a probe.

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