Haryana’s cotton scam

Even as most small and middle-rung farmers are distressfully debt-ridden, the chain of operators of their produce down the line is reaping a bounty, albeit of the black variety. Take the case of the cotton scam in Haryana: of the total cotton (1-1.25 crore quintal) reaching the mandis, as much as 50 per cent is on the black. This daylight robbery has duped the state of Rs 200 crore in the form of evasion of market fee and GST. Interestingly, while the GST regime that was rolled out on July 1, 2017, with the noble aim of having a uniform tax rate structure in the country is still in the process of rationalisation, racketeers have already found ways to hoodwink the taxman.

As the scam-busting report of The Tribune shows, their modus operandi involves the setting up of non-existent firms. In the name of these fly-by-night companies, nearly 45 lakh quintal of unbilled cotton has been turned lily-white with the connivance of unscrupulous officials. Not only this, a fraudster also gobbles the cherry on the top: it is the tidy profit he pockets by taking advantage of the differential tax slabs. He ‘buys’ a bill from the next in the ‘organised loop of looters’: a dealer of high GST (18-28 per cent) items such as cement, cigarettes, TMT bars etc for a mere 1-2 per cent. This input credit is then adjusted against the ‘sale’ of cotton worth up to 5.5 times since cotton attracts only 5 per cent GST.

This story is just the tip of the iceberg. There are many more such scams worth crores waiting to be unearthed. Physical verification of all firms registered by the excise and taxation authorities and data mining of the amounts of all commodities purchased and sold is sure to lead to the tumbling out of many more fake invoices issued for transactions that never took place. A couple of high-profile trials and convictions in fiscal crime cases should send the much-needed message across the state. It will deter potential scamsters as well as enrich Haryana with its duly deserved taxes.