FREIGHT SCAM HITS RAIL­WAYS

Tax eva­sion in pas­sen­ger train freight robs cash- strapped states of crores in rev­enue. Pun­jab alone loses Rs 2 crore a day.

India Today - - NATION - Asit Jolly

What is the sim­plest way to move goods, even con­tra­band, across states, safe from pry­ing tax of­fi­cials or po­lice­men? Any good trans­porter will tell you the Rail­ways is your best bet. But per­haps not for much longer.

Pur­sued by a Pun­jab tax of­fi­cial, three se­nior North­ern Rail­ways of­fi­cers are in the dock for al­legedly sup­press­ing facts that could ex­pose a case of eva­sion of state levies. Pas­sen­ger trains move com­mer­cial freight worth an es­ti­mated Rs 20 crore ev­ery day. Of­fi­cials say value added tax ( VAT) and Cen­tral sales tax ( CST) on these goods could add up to over Rs 700 crore a year in Pun­jab alone.

On July 18, Cap­tain Yu­vin­der Singh Matta, 56, a for­mer In­dian Army ar­tillery of­fi­cer and cur­rently joint di­rec­tor ( In­ves­ti­ga­tions) in Pun­jab’s Ex­cise and Tax­a­tion ( E& T) Depart­ment, sum­moned P. K. Goyal, chief com­mer­cial man­ager, Rail­ways, along with Ferozepur Di­vi­sional Rail­way Man­ager ( DRM) N. C. Goyal, and Am­bala DRM P. K. Sanghi, to ap­pear be­fore a tax court in Bathinda on Au­gust 9. It was part of an of­fi­cial in­quest un­der the Civil Pro­ce­dure Code, 1908, to re­cover de­tails of all freight bound to or from Pun­jab on pas­sen­ger trains since the state joined the VAT regime in 2005.

“If you fail to at­tend and pro­duce the in­for­ma­tion and doc­u­ments on the day and hour afore­said ( 11 a. m., Au­gust 9, 2012) you will be dealt with ac­cord­ing to law,” states the notice ( copy in IN­DIA TO­DAY’S pos­ses­sion).

This af­ter rail­way au­thor­i­ties had, on two ear­lier hear­ings on June 20 and July 4, failed to fur­nish de­tails of records that law man­dates any trans­porter to main­tain. These in­clude de­scrip­tion, value and weight of trans­ported goods, be­sides the name and tax in­for­ma­tion net­work ( TIN) of the con­signor and con­signee. The ab­sence of such in­for­ma­tion makes it vir­tu­ally im­pos­si­ble for of­fi­cials to track tax­a­tion de­tails of ship­ments.

The le­gal ac­tion was started in the wake of test raids by state E& T teams at Ferozepur, Bathinda and Lud­hi­ana sta­tions be­tween April and May this year, that found no taxes had been paid on any of the con­sign­ments seized from Rail­ways par­cel yards.

Cap­tain Matta is con­vinced he can blow the lid off what he be­lieves is a ma­jor na­tion­wide racket, wherein un­scrupu­lous traders and trans­porters

lease space on par­cel and brake vans of pas­sen­ger trains to swin­dle cash­strapped states of levies.

De­spite this, rail­way per­son­nel tried to block ex­cise of­fi­cials dur­ing the raids. On May 23, for in­stance, raid­ing of­fi­cials at Ferozepur sta­tion stated in a note to Pun­jab Ex­cise and Tax­a­tion Com­mis­sioner ( ETC): “The par­cel clerk and the chief par­cel su­per­vi­sor were in the of­fice. They shut down the elec­tric­ity sup­ply in the par­cel of­fice and did not co­op­er­ate…”

Rais­ing fur­ther sus­pi­cion, Se­nior Di­vi­sional Com­mer­cial Man­ager ( DCM) at Ferozepur, G. M. Singh, or­dered all sta­tions in his ju­ris­dic­tion to pre­vent seizures by E& T of­fi­cials. His let­ter of June 4, wrongly claimed that such raids were a “vi­o­la­tion of the JPO ( Joint Pro­ce­dure Or­der) by the min­istries of rail­ways and fi­nance”. Singh’s mis­sive said that the raids must not be al­lowed, “to avoid loss of Rail­ways’ rev­enue”.

The JPO was the out­come of a joint min­is­te­rial com­mit­tee re­port on March 29, 2006, by then ad­di­tional sec­re­tary ( Rev­enue), K. Mo­han­das, and S. K. Nanda, com­mer­cial ad­viser to the Rail­way Board, con­sti­tuted fol­low­ing a Ker­ala High Court division bench rul­ing on Jan­uary 20, 2006.

“We have our lim­i­ta­tions, and can’t ex­pose goods en­trusted to our pos­ses­sion to any and ev­ery­body,” says N. C. Goyal, DRM, Ferozepur. He in­sists that the Rail­way Act doesn’t per­mit check­ing of con­sign­ments within sta­tion premises, ex­cept when “con­tra­band” is be­ing trans­ported. He how­ever ad­mit­ted that there was no way of as­cer­tain­ing the con­tents of the ship­ments it car­ried.

DCM Singh says, “Ship­ments are booked on a ‘ said to con­tain’ ba­sis and charged by weight.” The Rail­ways, he in­sists, are mere car­ri­ers and can­not be expected to ver­ify de­tails of sell­ers and buy­ers. “That’s the re­spon­si­bil­ity of the lessees of par­cel and brake vans.”

Pun­jab E& T com­mis­sioner A. Venuprasad says, “The sys­tem of leas­ing car­riages to traders or their agents is open to abuse.” He feels rail­way of­fi­cials com­pound the prob­lem by zeal­ously pro­tect­ing ship­ments from any scru­tiny. “There have been many in­stances where of­fi­cials have re­booked un­loaded goods to other des­ti­na­tions dur­ing a tax raid,” he says. Matta and other ex­cise of­fi­cials are con­vinced it’s a sign of “col­lu­sion be­tween Rail­ways per­son­nel and the VAT dodgers”.

On July 19, a day af­ter the three top rail­way of­fi­cials were sum­moned to Bathinda, Pun­jab Deputy Chief Min­is­ter Sukhbir Badal, who also holds the E& T port­fo­lio, was in­formed of the mas­sive scam, and that cu­mu­la­tive losses over the past seven years would be enough to pull Pun­jab out of its cur­rent fi­nan­cial troubles. Alarmed at the mag­ni­tude, Badal di­rected of­fi­cials to “plug the leaks”.

That is pre­cisely what Yu­vin­der Matta has set out to do. But the enor­mity of the scam and the like­li­hood that it ex­tends far be­yond Pun­jab’s bor­ders, to vir­tu­ally ev­ery state in In­dia, per­haps makes it a case fit for a full- blown CBI probe.

Pho­to­graphs by KUL­BEER BEERA

CAP­TAIN YU­VIN­DER SINGH MATTA ( RIGHT) LEADS A RAID IN BATHINDA STA­TION

TRANS­PORTERS AND TRADERS ALL OVER IN­DIA LEASE SPACE ABOARD PARCELAND BRAKE VANS OF PAS­SEN­GER TRAINS TO EVADE VAT AND CST.

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