The Department of Revenue Investigation on Friday filed a case at the Kathmandu District Court against Sunil Kumar Gautam, proprietor of Lucky AS Enterprises, for evading taxes worth Rs99.56 million through alleged submission of fake value-added tax (VAT) bills.

This is the third case filed by the department in the last 10 days against people submitting fake VAT bills with an aim to evade both VAT and income tax. The alleged tax evasion in the three cases is cumulatively worth Rs342.85 million.

On November 12, the department registered a case at the Kathmandu District Court against proprietors of Huspy Care International and Shree Shyam Traders for dodging taxes worth Rs111.98 million.

Likewise, the department on November 5 had filed a case at the same court against the proprietors of Nepal Donghua Construction Engineering Company, charging them of evading both VAT and income tax worth Rs 131.31 million.

“After first targeting the sellers of such bills, our focus is now on investigating and filing cases against the firms that purchased the bills and used them to evade tax,” said Dirgharaj Mainali, director-general of the department. “We will continue filing cases based on investigations.”

According to the department, more than 900 firms are under investigation for purchasing fake VAT bills. These firms were delivering goods and services to government agencies, contractors, multinational companies, hydropower companies and hospitals, depriving the government of its slice of revenue.

More than 100 companies that sold fake bills are currently under the scanner, the department said.

The body responsible for investigating revenue theft had earlier filed cases against 39 individuals for printing and selling fake VAT bills. In March, the department had registered a case for the first time against 24 individuals. An additional 15 individuals were dragged to the court in June.

“The combined value of the fake VAT bills under investigation is around Rs11 billion,” said Mainali.

The alleged VAT scam may be the biggest one yet in terms of both value and the number of firms involved.
Previously, in the fiscal year 2010-11, the Inland Revenue Department had built up cases to recover Rs6.69 billion in back taxes from 518 firms. Many of these cases remain undecided.

“By showing higher expenditure on fake purchases, they also paid less income tax,” said Mainali.