The Commercial taxes department has detected tax evasion worth ₹10 crore in tobacco-related products by 26 firms across Bihar during surprise inspections on Tuesday and Wednesday. In total 39 firms, mainly dealers and distributors of commodities like cigarettes, paan masala and areca nut, were covered under the raids.
The department officials said the inspections were based on data intelligence and inputs from field officers that a large number of firms dealing in cigarettes, paan masala, areca nut and bidis were evading taxes by not paying cess and also not reflecting value addition.
“We have seized goods worth ₹15 crore and detected tax evasion worth ₹10 crore. The godowns of these firms engaged in clandestine trading have been sealed. Heavy penalty and other legal action would follow against the erring firms,” said Dr Pratima, commissioner cum secretary, Bihar commercial taxes department.
Officials in the department aware of the developments said the firms engaged in tax evasion on tobacco products were bringing stocks illegally from states like Uttar Pradesh, West Bengal and Assam and not showing them in their books of accounts to evade taxes. Paan masala stocks were being brought in from UP and sold illegally without any books of records.
“The dealers of paan masala, a product with a huge market, used to get consignments from UP clandestinely and keep it in their godowns from where it used to be channelized in the market. Some of the dealers caught in the raids have confessed to have brought in consignments of paan masala and other tobacco products from neighbouring states and also from Assam and Bengal by showing it as stocks of sugar, jaggery and other products just to evade taxes,” said one officer, engaged in the raids.
One primary reason for Tobacco products to be considered an evasion-prone commodity is it falling in high tax category under the GST regime. Paan masala attracts 28% tax and 60% cess while cigarettes and tobacco fall in 28% tax and 160% cess category.
“The dealers were mostly showing sale of cigarettes at lower price than retail rate to avoid cess payment,” said the officer quoted above.
Dr Pratima said the generation of bills on eway portals was negligible by these firms. “These firms were evading taxes and cess in a big way. They were not showing value addition on goods and paying taxes through input tax credit. The inspections were carried out as part of the department’s regular monitoring of goods considered evasion-prone commodities,” she said.
The commissioner also highlighted that the department in the last few months had seized 29 commercial vehicles laded with paan masala and detected tax evasion worth ₹2.96 crore.
Commercial taxes is one of the main revenue generating departments of the state. In August, 2021, the GST collection in Bihar was ₹1037 crore, which was 7% higher than the corresponding period last year. In August 2020, the GST collection in the state was ₹967 crore, as per Press Information Bureau of Bihar.