• Jan
  • 17
  • 2011

Sales tax evasion racket in Mumbai used hawala bills to save tax on transactions worth Rs 700 crore

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A tax evasion racket involving over 400 firms, most of which are based in the city, has come to light. The state sales tax department, which busted the racket, claimed that its initial assessment showed that the racket involved transactions worth Rs 700 crore.

A senior department official, who is investigating the case, said the firms had used hawala bills to evade tax on purchase of goods.

Such bills are issued by hawala dealers, who issue fake bills (ones without dispatching goods) for a commission. The bogus bills were used by beneficiary companies to fraudulently claim tax deductions on goods purchased.

The official said that most of the companies involved in the racket have offices at Darukhana in south Mumbai, and are part of the steel industry.

The department got its first breakthrough in the case last week, when it raided the office and the residence of a hawala dealer involved in the case. “During the raid, we found records to suggest that the dealer was using 28 registered firms to issue hawala bills. Further probe revealed that the beneficiary list included at least 400 firms, including some reputable names in the steel industry,” the official said.

The probe also revealed that the entire family of the hawala dealer was into the dubious trade. Following this detection, the department is now analyzing documents confiscated during the raid to uncover the beneficiaries. “An initial analysis has shown that the fraud involved at least 400 firms,” an official said.

The department plans to raid such firms and recover the evaded tax with penalty. It is also likely to prosecute the hawala dealer and his associates for running the racket.

The multi-crore racket is being seen as one of the most significant detections in the past one year. Names of the beneficiaries and the dealer have been withheld as the probe in the matter is ongoing.


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