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VAT scams galore at Tax Department
The Rs.180 million VAT (Value Added Tax) fraud busted by vigilant officials at the Inland Revenue Department (IRD) last week was not an isolated one; similar frauds had been going on in the department for years, IRD officials said yesterday.
They alleged that several such frauds at the department had been covered up by officials with the support of previous Commissioners General of the IRD.
In some cases, the department conducted internal inquiries but no action was taken against the culprits, they said, citing as example, previous VAT scams which were swept under the carpet.
They noted that no action was taken in the Capri Club VAT scandal which was exposed by the Sunday Times in August 2010.
In this scam, the club with the help of a tax consultant was able to settle a massive VAT payment arrears to the tune of Rs. 528,000 by paying only Rs. 75,000 within days.
The most recent VAT fraud was carried out in a similar manner with the engagement of a tax consultant, IRD officials said.
Another VAT scam running up to Rs. 500 million was reported in 2010. An investigation was carried out on six cases in which 20 people had been accused of fraudulently obtaining VAT refunds.
Nothing had come out of the CID probe in the large scale fraud in which VAT fraudsters had used forged documentation and in some instances several fake identity cards to claim refunds, the officials said.
The CID had also probed a previous VAT scam amounting to Rs. 60 million and the report containing evidence was handed over to the Attorney General’s Department. The investigation is related to a textile factory owner from Padukka.
In the latest VAT scam, two IRD officers arrested on charges of having defrauded Rs.180 million due as tax revenue by altering and deleting computer data of seven companies were ordered to be remanded till November 7 by Colombo Fort Magistrate Kanishka Wijeratne.
The CID launched investigations into this VAT fraud on a complaint lodged by IRD Deputy Commissioner Susil Asoka Jayalath on the directions of Commissioner General Mallika Samarasekera. The two suspects named in this scam are computer analyst K.R. Lesley Rowel and assessor Garlis Nakandala.
The new VAT fraud reported last week has raised questions about the RS. 3.9 billion VAT fraud involving businessman Kamil Kuthubdeen. The Colombo High Court has issued warrants for his arrest but he is said to be on the run again leaving his hiding place at two Dubai city hotels owned by him.
The offence was said to have been committed by the suspect and his accomplices between November 15, 2002 and August 15, 2004.
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