The sleuths of the Commercial Taxes Department have unearthed a major racket of “bill traders” which was assisting edible oil manufacturers and traders of Challakere in Chitradurga district to evade sales tax by issuing them false bills.
Commercial Taxes Commissioner B A Harish Gowda told reporters in Bangalore that the existence of a racket came to notice after sleuths led by Joint Commissioner (Intelligence) Dayashankar raided the residence of one suspected “bill trader” in Challakere and found huge quantity of fake and loose bills issued to many edible oil manufacturers and traders.

“Bill traders?”
Those persons, who register firms by providing fake details and addresses with the tax authorities, print bill books under the registered name and issue false bills to the manufacturing and trading firms to help them to evade tax or claim tax rebate are known as “bill traders” in the business world, explained Mr Gowda.
How it works?
According to the Commissioner, the bills issued by the “bill traders” would help the traders to claim rebate on input tax under Value Added Tax (VAT) system. The traders and manufacturers (indulging in such illegality) show that they purchased goods (mainly raw materials) from these “bill traders” by paying requisite tax to the latter. However, in reality the “bill traders” do not deal with any goods but only issue “bills” to help the firms evade tax. In the result, neither the “bill traders” nor the traders pay tax to the Government for raw materials purchased by the traders.
Moreover, it is difficult task to track “bill traders” due to fictitious address provided by them at the time of registration, he described. There were also instances where traders themselves engage in “bill trading” activities and connivance of tax officials with such traders also can not be ruled out, said Mr Gowda.

Firms involved
In the present case, based on the fake bills found in the possession of  Challakere-based “bill trader,” the officials raided the premises of Giridhar Oil Enterprises, Kamalanabha Oil Enterprises, Padmavallabha Oil Enterprises, Narayanaswamy Commercials, Sri Srinivasa Industries, Sri Chakri Oil Enterprises and Surabhi Commercials, all Challakere-based edible oil manufacturing and trading units.
Mr Gowda said the search and seizure of documents disclosed that in the years 2005-06 and 2006-07, total declared turnover of these dealers was Rs 111.59 crore and for that they should have paid a tax of Rs 3.86 crore. However, these trading and manufacturing units not only had claimed rebate on tax up to Rs 3.92 crore based on the bills given by the “bill traders” but had also sought false refund of Rs 51.80 lakh.