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In a first of its kind initiative by any State to detect evasion of local taxes, the Maharashtra Sales Tax Department has set up a Commodity Analysis Unit for analysing the market trends in the commodities trade.
The department will keep an eye on the prices of 16 major commodities, which include bullion, edible oils, ferrous metals, petroleum products and chemicals.
The Commodity Analysis Unit (CAU) is a sub-unit of the Economic Intelligence Unit (EIU). Other State governments are also gearing up to launch units on the lines of EIU.
The CAU has drawn up a comprehensive list of 54 products including the major commodities, which are more prone to sales tax evasion. Out of the total sales tax revenue of about Rs 47,000 crore, revenue from these products is almost Rs 28,000 crore.
The Maharashtra's Sales Tax Commissioner, Mr Sanjay Bhatia, told Business Line that the CAU is analysing the financial ratios, price movements, and demand and supply situation for the commodities. Based on the analysis, ‘market scenarios' are built. However, if the tax returns of a particular dealer are not matching with the market trends then the dealer is given an opportunity to explain his tax payment. If he is unable to explain his payment then his books would be audited, he said.
“For example, the CAU will look at the business transactions of iron and steel trader for the last five years. It will identify the main traders and find out the average tax paid by them in the last five years. It will raise a red flag against those traders, whose tax payments are out of line with the average.
“The commodity analysis will give clues for investigation. If the market is going in one direction but the trader's business and tax payment shows another picture then he will have to explain,” Mr Bhatia said.
He said that with the advent of EIU, detecting tax evasion has become easier. Recently, the Data Analysis and Integration Unit found that 980 registered dealers were issuing bogus bills to other big traders, which helped in tax evasion. From the traders about Rs 700 crore recoveries are expected and Rs 200 crore has already been recovered.
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