The Unholy Nexus-HC orders probe into VAT refunds worth Rs 500 crore

The court records its painful observation that on account of the unholy nexus between traders, officials and other beneficiaries, the state has been put to a huge loss… Almost Rs 500 crore has been given to various firms on the basis of interstate trade and export of goods.

                                                                                                                    — Justice Jitendra Chauhan

Chandigarh, November 26
Mincing no words to say VAT refunds worth almost Rs 500 crore have been given to firms in Punjab for interstate trade and export of goods, the Punjab and Haryana High Court has ordered a probe by the Central Bureau of Investigation (CBI).

The orders by Justice Jitendra Chauhan came after the High Court was told that goods dispatched by a Ludhiana firm by road and rail were shown to have reached the Bangladesh border the same day.

“The court records its painful observation that on account of the unholy nexus between traders, officials and other beneficiaries, the state has been put to a
huge loss.

“As per the status report submitted by the state counsel, VAT refund of almost Rs 500 crore has been given to various firms on the basis of interstate trade and export of goods. The status report further reveals that the process for registration of FIR has been initiated against two more firms, which claimed a refund of Rs 1.14 crore and Rs 74.00 lakh.

“This initial probe by the economic intelligence unit indicates that these facts could just be the tip of the iceberg. Keeping in view the fact that no consignment as such was dispatched, whereas there are receipts of transporters, including the Indian Railways, it is a sufficient pointer towards the whole exercise having been executed in connivance with the state machinery, which warrants a detailed inquiry into the matter by an independent agency,” Justice Chauhan asserted.

The issue came to Justice Chauhan’s notice after Raman Kumar Garg sought anticipatory bail in an FIR dated July 26 for cheating and other offences registered at Ludhiana.

The state counsel argued that the petitioner wrongly claimed refund on goods allegedly exported by him to Bangladesh.

Dismissing the petition, Justice Chauhan asserted: “Upon verification by the economic intelligence unit, Patiala, it came to light that the goods in fact, were never exported. As per the record, the goods were transported through the Railways and by availing the services of private transporters…. It was, in fact, a paper transaction. Surprisingly, the consignment was allegedly despatched from Ludhiana on January 5 and the receipt of these goods has been shown to be at the Bangladesh border on the same day. The distance between the two stations is approximately 1,800 km and it is difficult to believe that the goods reached the destination by road and rail on the same day”.

Justice Chauhan concluded: “As per the status report submitted by the state counsel, an amount of Rs 3,73,92,28,747 has been refunded on interstate and export basis to 4,404 firms/entrepreneurs.

“An additional amount of Rs 1,09,33,29,795 has been refunded on exclusively export basis to 995 firms/entrepreneurs, including the amounts of Rs 1.64 crores, Rs 1.14 crore and Rs 0.74 crore, refunded to the petitioner, Jaldhara Exports, Ludhiana; Trimurti Hosiery, Ludhiana and Yourk International, Ludhiana, respectively. “The CBI shall examine each of such claims so as to confirm as to whether these have been validly processed and refunded.

Source: http://www.tribuneindia.com/2013/20131127/punjab.htm#16