Taxation officials under lens in fake paddy scam

The role of some taxation officials is under the scanner following the detection of a bogus paddy purchase scam in which two-wheelers and oil tankers were shown as vehicles carrying paddy outside Punjab. The Department of Excise and Taxation, Punjab, has imposed a tax of around Rs 10 crore on M/s Sahoowalia Rice Mill, Gurdaspur, for bogus purchase of paddy worth crores from a Delhi-based firm M/s Lakhi Shah & Co. and others. Anurag Verma, Excise and Taxation Commissioner, Punjab, confirmed that on checking the status of this firm through the web taxation portal, it was “not found”. “The vehicles allegedly used for transportation of goods had never crossed Karnal barrier. The dealer had shown transportation of rice through vehicle (PB-05C-9714) which on verification was found to be an oil tanker,” he said.
Officials confirmed that dummy purchase was shown from Delhi because in case of purchase from Punjab, the dealer would have become liable for payment of purchase tax.
Officials confirmed that on verification, it was found that M/s Lakhi Shah in connivance with two other firms created a cyclical chain of purchases to create bogus input tax credit. M/s Sahoowalia Rice Mill, Gurdaspur, showed purchases of grains worth Rs 6.43 crore from M/s Shiv Shakti and claimed an input tax credit of Rs 32 lakh on this account. But M/s Shiv Shakti did not pay any tax to the treasury and claimed equal amount of input tax credit by showing purchases of Rs 6.43 crore from M/s Padda Agrotech. Even M/s Padda Agrotech did not pay any tax as it claimed purchases of Rs 6.43 crore from M/s Shiv Shakti and claimed input tax credit of the same amount. Verma said that the dealer had shown purchase of rice worth Rs 19.7 crore from M/s Shri Nangli Agrotech on which it claimed input tax credit of Rs 98 lakh. The firm made sales of almost the same amount to this firm. “When asked to produce documents to prove the authenticity of the transaction, it could not produce documents for most of the transactions. For some transactions, it produced documents but on verification from the District Transport Office, it was found that vehicle no. PB-06M-9682 and PB-06M-9652, which were shown to have been used for the transportation of goods, were actually two wheelers,” he said.