Govt mulls criminal charges against some VAT evaders

KATHMANDU, NOV 07 -

Some firms involved in the Value Added Tax (VAT) evasion scam could face criminal charges also. The Finance Ministry has started discussions on the criminal charges that may be filed against those firms who used bills of other firms without letting them know and used innocent people to set up firms just to issue fake VAT bills.

According a high-level source at the Finance Ministry, discussions on filing criminal charges against the firms have begun after lawmakers at the Parliamentary Public Accounts Committee spoke in favour of sending those involved in such crime behind bars.

Finance Minister Barsaman Pun has already made it clear that filing criminal charges against them cannot be ruled out.

According to Rajan Khanal, the director general of the Inland Revenue Department (IRD), tax officers only can impose fines in cases of tax evasion as per the existing laws related to taxes. “Tax officers do not have the right to file criminal charges,” he said. “Other agencies concerned can take action for criminal offence if they term such activities a crime after our investigation.” He added that they are taking action against tax evaders as per the existing tax laws.

According to an official involved in investigating the scam, some companies have used fake bills to evade tax in a planned manner. While they printed fake bills of other companies, they were found to have opened bank accounts in the names of other companies and deposited the amount mentioned in the fake bills and latter withdrew the cash from the banks.

Some of them have evaded tax by registering firms in the names of their own workers and innocent villagers and making bills of the purchase of goods from them, investigations have revealed.

“However, the number of those committing such crime is low,” the source said.

An executive member of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has been found to have printed bills in the name of companies owned by two other executive members of the FNCCI just to show the purchase of goods from them so that tax could be evaded.

Suspecting such a crime, the IRD had inquired with owners of the companies in whose names the bills were issued and those that received the bills.

“The owners of the bill-issuing companies were surprised when they were shown the fake bills issued in the name of their companies,” a source involved in the investigations said.

A businessman involved in such crime had purchased goods five years ago from another company. On the basis of the same bills, the businessman printed fake bills and evaded tax by showing the purchase of goods.

The IRD probe has also found a housing developer with foreign investment using fake bills. The Inland Revenue Office called a supplier of bricks to a housing project after suspecting the evasion of tax on brick purchase. However, the owner of the brick supplying company was unaware of the supply to the housing company concerned. “We confirmed that the housing company made fake bills of the brick factory itself and deposited the amount that was earned through the sale of bricks in the name of the brick factory and latter withdrew that amount,” the source said.

Advocate Sajanbar Singh Thapa said such modus operandi falls under the category of criminal offence. “Making bills in the name of other companies without their approval, making and using fake bills and saying no transaction to be transaction is fraud,” he said.

He said police should be asked to investigate the firms and fraud charges filed against them after they are penalised as per the tax laws.

Source: Kantipur