With rising import of vegetable oils, tax evasion and other malpractices have also increased. Now trade circles reveal huge tax evasion by importers of the oils which is going uncaught. As per the estimates, in last six months Rs.150 crore of value added tax was evaded by giving wrong declaration in imports only on JNPT port in Mumbai.
According to an official from the Solvent Extractors' Association (SEA), importers import refined vegetable oil at JNPT port on high seas bases in the name of firm registered outside Maharashtra and mostly from Silvasa, M.P., A.P., U.P. etc but actually the imported oil is sold in Mumbai and Maharashtra in cash and without payment of VAT on it. Since bill of entries are in the name of parties from above places, that is hardly investigated. Another industry official said even the parties in whose name imports took place have been found to be dummy in their findings.
Only on JNPT port, in current oil year which began from November over 2 lakh tonnes is understood to have arrived and sold under this modus operandi. India's import bill towards vegetable oil has been between $10-11 billion a year and hence several non-traditional players have entered the business.
Tax avoided imported is used for illegal blending with the pure oil of higher quality and sold in market. Problem that the SEA had raised was that imported oil business is run on higher volumes and very thin margins as competition is immense. Tax evaded oil is sold cheaper which is hurting genuine players.
It is not only tax evasion that has become a peril. In last few years several players, many of them from real estate sector have opened subsidiaries for dealing in imported oils. The incentive for them to be in vegetable oil import business is quite different. For imports, trade and industry gets cheaper dollar finance for 90-180 days. However in edible oil import business, these importers sell oils at a very thin margins and get the money maximum in little over a months' time. They use cheap credit till maturity for their other businesses. This practice is popular among real estate players as interest rates prevailing in that business is much higher.
Source:- business-standard.com
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