DNA EXCLUSIVE: AMAZON UNDER SCANNER FOR OVER RS 200 CRORE TAX EVASION
Amazon is also alleged to have taken the goods from manufacturers/traders at lower price and told them to compensate the difference by claiming Cenvat credit. However, nothing concrete has been found as yet to establish the said allegations. The probe is still underway.
The Directorate General of Central Excise Intelligence (DGCEI) is investigating accounts of the e-commerce giant Amazon.com and traders associated with the company for alleged tax evasion of over Rs 200 crore by misusing Cenvat (central value added tax) credit facilities.
Investigators had recently conducted search operations at Amazon’s business premises spread across the country, including at its India headquarters in Bengaluru. “We seized some documents and recorded statements of Amazon officials,” said a tax official.
Traders are alleged to have misused Cenvat scheme that allows a manufacturer as well as a service provider to avail credit of excise duty paid on inputs or capital goods and service tax paid on input services. These credits could then be utilised for payment of excise duty on final products or service tax on the taxable output.
During the course of investigation, the DGCEI detected a modus operandi where bogus invoices of declared goods were issued to respective traders through dummy firms. Officials suspect that Amazon was aware of the modus operandi. Apparently, there have been issues with the accountability of the products sold through Amazon and that of the traders.
Amazon is also alleged to have taken the goods from manufacturers/traders at lower price and told them to compensate the difference by claiming Cenvat credit. However, nothing concrete has been found as yet to establish the said allegations. The probe is still underway.
dna email to Amazon, seeking its version, remained unanswered till the time of going to the press.
As per the rules, a manufacturer can claim Cenvat credit (at 12.5%) on amount spent on purchase of raw material, which can later be utilised for payment of central excise duty.
Further verifications revealed that firms, said to be providing the goods, are non-existent, the sources said.
“It’s prima facie a violation of the said norms. However, it is not correct to drag the ‘aggregators’ for the frauds committed by the traders,” said a tax expert on condition of anonymity.
Aggregrators are those who connect service provider with prospective customer through web-based application – to provide service under the brand name of the software application owner – which is Amazon in this case. In such a business model, the e-commerce website are usually paid in the form of commission (for sales in a particular period). Under the present tax regime, aggregators are liable to pay 14.5% service tax.
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dna has learnt that the probe on e-commerce companies has gained momentum since November 2015, after the Delhi High Court ordered that 21 e-commerce companies be investigated for flouting foreign direct investment (FDI) norms. Over the past two years, the brick and mortar retailers have raised their voices against the e-retailers saying they are luring customers with heavy discounts funded by foreign investments.
