India unearths liquor trade over-invoicing scheme

The Indian authorities have unearthed evidence of large scale tax evasion by over-invoicing in the Indian state of Tamil Nadu.

The Income Tax Department says it found over 700 crore (US$105 million) in undisclosed income in search and seize operations at two liquor manufacturing companies, SNJ Distillers and Kals Distilleries.

Extensive searches

Search action was launched last month at the major liquor producers at various locations across Tamil Nadu and other states. Searches were made at business premises as well as the homes of business owners, key employees and some suppliers.

Intelligence gathered over several months suggested that the businesses indulged in large scale tax evasion by over-invoicing of raw materials purchases and bottles according to an official statement.

The suppliers received payment at an inflated value but then paid back the excess value in cash to trusted employees of the businesses.

Shell companies

During the search operations, the Income Tax Department says that SNJ Distillers founder and chairman, S N Jayamurugan, had registered 912 shell companies that were ‘operating’ from a single building.

Jayamurugan allegedly forged documents to create apparently different addresses when shell companies were created and registered with the Registrar of Companies

Several more firms in the liquor trade are subject to a wider probe, which investigators expect will lead to the discovery of more instances of over-invoicing in the sector being unearthed.

Categories: Trade Based Financial crimes News

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