Federation for People’s Rights (FPR) Secretary G.Sugumaran submitted a memorandum to the Lt. Governor of Puducherry on 18.02.2010:
We would like to draw your kind attention on the fraud allegedly committed by the Mumbai based company Tilaknagar Industries Limited, which manufactures the liquor including Mansion House Brandy as brand name, an Indian Made Foreign Liquor (IMFL). More than 80 percent of the total volume, the said brand was distributed and sold in South India including Puducherry.
It is worth to note that the Govt. of Puducherry earns 70 % of the total revenue through various taxes imposed on sale of liquors. The said company swindled the Government money to the tune of about five crore rupees during the past three years.
The Government of Puducherry fixed and collects 58 percent sales tax for the IMFL products. The Government exempted four Distilleries running in Puducherry from the sales tax purely because of a murky deal. Various companies bottled the liquor in these companies and selling in order to reap the benefit of the said tax exemption. This leads
to a great revenue loss to the Government. In addition to the existing Excise Duty, an Additional Excise Duty was imposed, in order to compensate the loss incurred due to this exemption vide its order dated from 23rd April 2007 vide Government Notification No. 4703/DC(E)/SI/2007-II, issued by the Department of Revenue and Disaster Management.
The said Company followed the category of declared price range per case containing 8.64 / 9/12 bulk litres from Rs. 850 to Rs. 1049 as mentioned in the Government Notification. The company is paying Rs. 522 for each case for the brand Mansion House Brandy as per the above selected category to the Government. If the company crosses the next category it should pay excess Additional Excise Duty to the Government as per the said Notification.
In the intention to cheat the Government, the said company creates a new head as ‘Annual Turnover Profit’ in the cost card and selling the liquor. The company alters the accounts to maintain the above Rs. 850 to Rs. 1049 slab and getting back the excess money categorized as ‘Annual Turnover Profit’ from the Distributors and Wholesalers. By such manipulation it submits the accounts to Excise Department as if it is strictly following the slab of Rs. 850 to Rs. 1049.
Actually the company is selling the products exceeding the fixed slab Rs. 850 to Rs. 1049 by entering the next slab Rs. 1050 to 1349 as mentioned in the said Government Notification. If the company shows the next slab, it should pay Rs. 99 per case of product sold in Puducherry. Since three years after the issue of the said notification by the Government, this company has sold 5 lakh cases of products worth Rs. 300 crores. So, the company should pay Rs. 5 crores as Additional Excise Duty to the Government.
The company had cheated the Government by indulging in these fraudulent and unfair practices with intention to violate the law explicitly, which would surely cognizable under the penal offence. Puducherry Government is suffering a lot to mobilize fund to implement various public oriented schemes. In this context the above said company’s act of continuously committing this grave crime is a great betrayal to Public. Such unfair practice would only favours the liquor selling companies through various tax exemptions and its manipulation which would purely cause a huge revenue loss to the Exchequer.
We are also very much worried to hear the story of a single company which is cheating the Government to the tune of several crores of rupees. We expect your Excellency’s kind attention to probe the activities of other Liquor Companies also in Puducherry in this regard.
So, we humbly request your Excellency to order for a C.B.I. enquiry in the referred matter and initiate stringent criminal action against the company owners and others who were abetting to this crime by causing wrongful loss to the Government and thereby allowing to enjoy wrongful gain to the private players.
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