The Tamil Nadu government has informed the Madras High Court that criminal proceedings are pending against some iron and steel dealers since 2005 for tax evasion to the tune of Rs 2,739 crore.
Registered dealers under the then Tamil Nadu General Sales Tax Act, particularly those dealing in iron and steel, had evaded crores of sales tax by indulging in circular transactions and 'bill trading', Additional Advocate General Narmadha Sampath informed the court.
Bill trading is an activity where dealers, through documents, depict as though they are genuine registered buyers and sellers, when in fact, they only trade in bills for a consideration, without actual delivery of goods.
The AAG made the submissions while opposing a plea by Chennai-based Rukma Industries Limited (now Surana Corporation Limited), challenging notices dated April 16, 2014 demanding sales tax dues of Rs 92.37 lakh.
When the plea came up for hearing before Justice M Duraiswamy recently, Narmada Sampath pointed out that in similar other pleas moved by such dealers, "who were presumably bill traders during the TNGST period", the court had passed interim orders to ascertain and report whether assessments of the sellers were reopened.
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In view of these orders, the AAG produced the assessment records and several other documents on March 23 before the court to establish that the dealers were involved in circular transactions of iron and steel and bill trading.
"The petitioner and the other sellers had involved in purchases and sales made predominantly amongst themselves, having drawn registration numbers in different assessment circles and depriving the state exchequer of legitimate tax revenue which runs to crores of rupees, Sampath said.
The AAG pointed out that earlier, in many such pleas, the high court has set aside the assessments with instructions to reopen the assessments of selling dealers.
She said the commercial taxes department had filed a criminal case as early as in 2005 against proprietors of three such firms which did 'bill trading'.
Dues to the exchequer from them was around Rs 2,750 crore at the time of filing the case, she said.
There was documentary evidence to prove that the petitioners were also listed as parties in the criminal case, which also involves banks, she said.
Recording the submissions, the judge posted the pleas to the first week of April for further hearing.
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