Commercial tax department slaps show-cause notice on Rajesh Exports

The Commercial Tax Department has issued a show-cause notice to Rajesh Exports Ltd (REL) for suspected tax evasion.

An official source told Deccan Herald that one of the main contentions in the notice was that REL had claimed on its website that jewellery worth Rs 227 crore had been sold during Diwali in November 2012. However, the company had stated that there was business worth Rs 70 crore in its declaration to the department, he added.

The department’s Enforcement Wing officials had raided the corporate office of REL in the City and 67 outlets of its retail arm, Shubh Jewellers, across the State for suspected tax evasion on February 19.

“In a press release posted on the website in January 2013, REL claimed to have made a sale of jewellery worth Rs 227 crore. It specifically stated that 79,347 pieces of jewellery, weighing 734 kilos, were sold to customers during the Diwali sale. On the contrary, it has declared that it had sold jewellery worth Rs 76 crore during this sale. This apart, some other discrepancies were also found. The turnover declared in the balance sheet also varies with the turnover declared in the returns filed,” an official told Deccan Herald.

A source said the officials had found discrepancies in the stock transfer as per e-Sugam. The officials said the difference was found in the transferred and the actual stock found at the franchisee outlets from 2011 to 2014.

“The company has raised e-Sugam for transporting the articles of gold to its franchisees. Either the franchiser or the franchisee will have to declare the consignment value. The value of stock transfer as per e-Sugam should tally with the value reflected in the returns. The difference we found during physical stock verification on the day of the raids was Rs 78 crore (2010-11), Rs 198 crore (2011-12), Rs 300 crore (2012-13), Rs 611 crore (2013-14) and Rs 87 crore till December (2014-2015),” the official said.

e-Sugam is a procedure set by the Commercial Tax Department for all the dealers transporting the designated goods worth over Rs 20,000 to other dealers and upload the same on the department’s website and obtain a unique number as proof of uploading such transporting details.

The department has given seven days’ time to the company to submit its reply. An official said the exact quantification would be done after the department received the company’s reply and after the collection of data from the franchisees. Headquartered in Bengaluru, REL is one of the world’s leading manufacturers of gold ornaments.

REL chairman Rajesh Mehta said the company was yet to receive the notice. “I am reiterating that there is no question of any tax evasion by REL. Once we receive the notice, we will certainly submit the reply at the earliest,” he said.