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.
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.
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.