Circular trading firms will remain on the radar of the state tax department. Department of registration applications of edible oils, iron and steel firms will investigate thoroughly. Only then will the action on applications go forward. Firms present in the existence of the three sectors are also being investigated.
In Kumaon, more than 50 thousand traders are registered under the GST in the State Tax Department. From December 2017 to August 2018, nearly eight firms related to iron and steel have traded hundreds of crores in many states and deposited less tax. When the department started its investigation, the business was disclosed in many states of the country. On this, the state tax department canceled their registration and wrote letters to other states and gave information about tax evasion of firms. Now the state tax department is taking full precaution on firm registration with all three sectors. When the registration of iron, edible oil and steel comes first, the firm’s address, its owner, PAN number, etc. are being examined. After this, the registration process is being started.
What is circular trading
The circular trading firm takes a lot of registration on the same pan. Shows businesses in the same state or in many states. There is also a bank account but there is no more transaction or liquidity. Such businessmen keep selling goods in the same fashion. Their sales are in crores, but instead, tax deposits in thousands only. This activity does not happen on actual purchase and sale. Only shown in papers. They transfer credit only among themselves. Circular trading only does business for a short time. In this many taxes of millions are evaded.
Last year, the registration of some firms was canceled. Terrain screening of edible oils, iron steel and iron firms is also being done. Only after the investigation it will be registered, which will prevent tax evasion.
-BS Nagniyal, Additional Commissioner, Kashipur Zone