Iron and steel dealers face 2.7k cr tax evasion charge

Making submissions before Justice M Duraiswamy, additional advocate general Narmadha Sampath said registered dealers under the then Tamil Nadu General Sales Tax Act (TNGST), particularly those who were dealing in iron and steel, have evaded crores of sales tax by indulging in circular transactions and ‘bill trading’. She was opposing a plea moved by Chennai-based Rukma Industries Limited (now Surana Corporation Limited), which challenged the notices issued way back on April 16, 2014 to the tune of Rs92.37 Lakh.

Bill trading is the activity wherein the dealers, through documents, depict as though they were genuine registered buyers and sellers when in effect they only traded in bills for a consideration without actual delivery of goods, the additional advocate-general submitted. “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,” said the additional advocate general. 

Also, producing the assessment records and several other documents to establish the fact that the dealers were involved in circular transactions of iron and steel and merely bill trading activities evading from legitimate payment of taxes, she pointed out that earlier, in many of such pleas, the High Court had set aside the assessments with instructions to reopen the assessments of selling dealers, while in similar other pleas moved by such dealers, who were ‘presumably Bill traders during the TNGST period’, the court passed interim orders to ascertain and report whether assessments of the sellers were reopened. 

“The commercial tax department has filed criminal case as early as in 2005 against the proprietors of three such firms that had indulged in bill trading activities. The due to the exchequer was around Rs 2,750 crores at the time of filing the case. There is documentary evidence to prove that the petitioners were also listed as parties in the criminal case, which also involves banks,” Narmadha Sampath added. 

Recording the submissions, Justice Duraiswamy posted the pleas to first week of April for further hearing.