In order to plug tax evasion worth crores of rupees and also to stop the bogus VAT refunds, the Department of Excise and Taxation has issued new instructions to the iron and steel industry.
According to the new notification, which was implemented on Wednesday, input tax credit on iron and steel goods will be available only in the hands of the first person making purchases from a manufacturer or an importer of such goods in the state of Punjab.
Earlier, this benefit used to be passed on to the second and third buyers of the same product as well. Excise and Taxation Commissioner A. Venuprasad said, “This is to check the tax pilferage. We have unearthed scams worth crores of bogus VAT refunds in Jalandhar as well as in Ludhiana where people had not done any purchases but had claimed input tax credit and afterwards had also asked for VAT refunds.
“Moreover,” he said, “transaction after first person purchases are very less and most of them are bogus and hence this move was very much in order.”
The Beopar Mandal however has reacted sharply to the move. Amrit Lal Jain, president, Punjab, and Mohinder Aggarwal, general secretary of Beopar Mandal, Ludhiana, claimed that it would bring down the revenue of state government and also cut into the business of the small traders who purchase iron and steel from the secondary buyers.
They also predicted increase in prices of steel as a result of this new change. Meanwhile, it needs to be mentioned that Mandi Gobindgarh, the steel town of Punjab, will be affected the most while industries in Ludhiana, Jalandhar and other cities which are also into iron and steel business will also be impacted. The traders are resenting a lot because they will be affected the most, they said.
Venuprasad however said,” A Beopar Mandal delegation will be coming to meet me soon, and I will clarify their doubts.”
