₹528 cr. VAT evasion on nonduty paid liquor unearthed
Trouble is brewing for the Telangana State Beverages Corporation Limited (TSBCL) as a special audit of two distilleries by the Commercial Taxes (CT) department recently has revealed ValueAdded Tax (VAT) evasion on account of nonduty paid liquor (NDPL) at a staggering ₹528.75 crore.
The department undertook special audits when it had detected variations in the VAT collections on liquor in comparison to excise duty collections, pointing towards a leakage in revenue. In normal course, an assessee computes tax liability on total sales in a month and files a tax return in the subsequent month. This practice is even followed by the oil marketing companies but TSBCL is being accused of given a go by to this procedure.
Top sources in CT department noted that invoice and despatch challans issued by the Indianmade foreign liquor (IMFL) depots do not mention VAT. The officials found no correlation to the VAT returns filed by the first point of sale, which is the TSBCL, strengthening the doubt that there is rampant evasion of VAT revenues. Excise duty is levied on volume and VAT on the
Special audits by Commercial Taxes department detect variations, pointing towards a leakage in revenue
sale price. That means VAT increases as price increases. Despite that VAT revenue remained lower than excise duty. A conservative estimate after inspection of two distilleries by the department had revealed VAT evasion on account of nonduty paid liquor at a staggering ₹528.75 crore. The inspection had yielded tax suppression of ₹117.94 crore and ₹410.81 crore in the current year. “Production of high quantities of NDPL was noticed during these inspections,” disclosed top officials.
About 123.82 lakh proof litres of liquor has escaped levy of all kinds of duties and taxes from these two distilleries alone. It was also noticed that these two distilleries were given a special concession to run their units “over time” by the previous government.
Hologram lapse
Another glaring gap found was that the bottles and “cases” of liquor are supposed to be tracked by the holograms but GST was being evaded by false declaration of the turnovers. Evasion to the tune of ₹54 crore has been detected on this count, said top sources. Officials said TSBCL is liable to pay GST on supply of holograms. It amounted to under declaration of tax liability by the hologram provider M/s UFlex Limited to an extent of ₹78.49 lakh, they charged.
CT officials are questioning if the excise department can allow “subcontracting” of holograms considering the confidentiality aspect. When contacted, Commissioner of Commercial Taxes T. K. Sreedevi had confirmed that her special teams had undertaken the special audit recently. Excise officials were not available for their version.