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18 dealers evade Rs 19.64 Cr Nagaland Govt. tax

Nagaland News

KOHIMA, AUGUST 9: In a resource crunch state like Nagaland where tax on goods is one of the prime sources of revenue, the Comptroller Auditor General of India (CAG) has revealed tax evasion amounting to Rs 19.64 crore by 18 dealers during the period April 2017 to 2019.


Two dealers concealed sales turnover and evaded Nagaland Value Added Tax (VAT) of Rs 5.24 crore while 16 dealers concealed applicable taxable rate of interstate purchases and evaded VAT of 14.40 crore, revealed the CAG report in general, economic and revenue sectors of Nagaland for the year ended March 31, 2019.
Examination of assessment records under the Superintendent of Taxes, who are also the Assessing Authorities (AAs), in September 2019 revealed that the two dealers – M/S Gujarat Co-operative Milk Marketing Federation Ltd and M/S Nestle India Ltd. declared a consolidated gross receipt of goods valued at Rs 252.36 crore from outside the State during the period 2013-18 by utilizing F7 (tax return) forms, it said.
The returns filed by these dealers were scrutinized and accepted by the AAs under Section 32 of the NVAT Act, 2005 with a tax liability of Rs 29.34 crore on total sales turnover of Rs 244.53 crore, it said.
On cross examination of the Trading Accounts submitted by the dealers with the invoice details obtained from the TAX soft – VAT e-Filling System revealed that the stock transfer of goods through utilization of “F” forms by the firms were taxable at 13.25/14.50%, it said.


However, the CAG pointed that the firms had declared sales as taxable at 14.50%, 13.25%, 4.75% and 5% and paid Rs 29.34 crore only against the actual total tax liability of Rs 34.58 crore, resulting in short levy of tax amounting to Rs 5.24 crore.
Hence, the dealers were liable to pay Rs 5.24 crore and penal interest of Rs 5.15 crore in accordance with Rule 49 of the Nagaland Value Added Tax Rules, 2005, it said.
The Department in reply stated in March & July 2020 said that show-cause notice was served in November 2019 to the two dealers against which, M/s Gujarat Co-operative Milk Marketing Federation Ltd. requested more time for further consultation to give proper reply with facts and figures.
The Department in October 2020 stated that in reply to the show-cause notice issued, the M/s Nestle India Ltd. said that some of their best selling products fall under Schedule-IV, Sl. No. 36 taxable at 4.75% up to 31 July 2015 and 5% with effect from August 1, 2015.
However, the CAG stated that the reply of the Department regarding claim of lesser tax rates by M/s Nestle India Ltd. is not acceptable as records available with the Department disclosed that all the items imported by the dealer from outside the State were listed at Serial Number 104 of Schedule-V of NVAT Act as Milk and allied products which are taxable at 13.25% and 14.50% up to 31 July 2015 and with effect from 1 August 1, 2015, respectively.
The taxes avoided of Rs 5.24 crore needs to be recovered along with penal interest, it said.


In the second instance, the CAG said that examination of assessment records under the above Superintendent of Taxes in September 2019 revealed that 16 dealers declared consolidated gross purchases of Rs 183.84 crore during the period 2015-18 by utilizing C15 and F16 forms.
The returns filed by these dealers were scrutinized and accepted by the AAs under Section 32 of the NVAT Act, 2005, it said.
Examination of category-wise purchases/receipt of goods with the invoice details obtained from the TAX soft – VAT e-Filling System revealed that 16 dealers made interstate purchase of Rs 183.84 crore under different tax rates against which tax payable is Rs 25.88 crore.
However, trading accounts submitted by the dealers revealed that goods valuing Rs 176.47 crore was purchased by the dealers and tax payable assessed by the AAs was Rs 15.46 crore against which the dealers paid Rs 11.47 crore with outstanding tax liability of Rs 3.99 crore.
The omission on the part of Superintendent of Taxes in assessing the returns resulted in evasion of tax amounting to Rs 10.42 crore by these dealers.
The dealers were liable to pay Rs 25.82 crore including concealed tax liability of Rs 10.42 crore, previous tax liability of Rs 3.99 crore and penal interest of Rs 11.41 crore in accordance with Rule 49 of the Nagaland VAT Rules, 2005.


Maintaining that a total amount of Rs 26.89 lakh was realised by the Department at the instance of audit, the CAG said that the Department may take steps to recover the taxes along with penal interest amounting to Rs 25.82 crore. (Page News Service)

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