Dubious VAT refunds: ED conducts searches in Sangli

The Enforcement Directorate (ED) carried out searches at around 16 locations in Sangli district, including the premises of Rajarambapu Sahakari Bank, as part of its probe related to alleged dubious sales tax refunds procured by a few private firms around 12 years ago. The agency?s preliminary probe has estimated that the extent of the dubious Value-added Tax (VAT) refunds withdrawn by the suspected firms could be between ?250 and 1,000 crore.

MUMBAI: The Enforcement Directorate (ED) on Friday carried out searches at around 16 locations in Sangli district, including the premises of Rajarambapu Sahakari Bank, as part of its probe related to alleged dubious sales tax refunds procured by a few private firms around 12 years ago.

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The agency’s preliminary probe has estimated that the extent of the dubious Value-added Tax (VAT) refunds withdrawn by the suspected firms could be between ₹250 and 1,000 crore, the officials said.

“A few private firms, who availed dubious and fake VAT refunds, are under the agency’s scanner. These suspects had accounts in the cooperative bank,” an officer said, adding, “It was noticed that the dubious VAT refunds were usually taken out in cash shortly after they were credited, usually the same day.”

The searches were held at the premises of certain entities and persons who are suspected of having links with the allegedly irregular VAT refunds, the ED sources said. The agency has recovered several incriminating documents and records that are being scrutinised for evidentiary value.

The ED, which initiated a money laundering probe a year ago, will examine lapses, if any, on the part of the bank’s officials.

“Every reporting entity, including banks, are required to furnish to the Financial Intelligence Unit-India or the FIU-IND, that is under the Ministry of Finance, reporting about suspicious cash reporting transactions and suspicious transaction reporting. It will be probed if the bank had complied with the reporting requirements,” the ED official added.

The FIU-IND was set up by the Centre in November 2004 as the national agency responsible for receiving, processing, analysing and disseminating information relating to suspect financial transactions. The FIU-IND is also responsible for coordinating and strengthening efforts of national and international intelligence, investigation and enforcement agencies in pursuing global efforts against money laundering. It is an independent body reporting directly to the Economic Intelligence Council.