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 Post subject: Biggest ever tax fraud of staggering Rs. 360 billion!
 Post Posted: Sun Jun 11, 2006 3:42 am 
Auditors reveal tax fraud of Rs. 360 billion

by Shamindra Ferdinando

The Auditor General’s Department has bared what a senior investigator called the country’s biggest ever tax fraud of a staggering Rs. 360 billion scam, involving officers of the Inland Revenue Department, Customs and the Registrar of Motor Vehicles. The detection was made by officers engaged in a confidential investigation. The findings made the Rs. 3.57 billion VAT scam a relatively minor swindle.

The Auditor General’s Department recently called for explanation from senior officials of the three institutions under investigation. The Sunday Island learns that they have been given time till June 25 to respond to the AG Department’s queries. The report is expected to be finalised once the officers reply. The AG is to forward the full report to Speaker W. J. M. Lokubandara next month.

The investigation launched in the aftermath of the Rs. 3.57 VAT scam that was hitherto labelled as the biggest tax fraud, revealed unprecedented weakness of the management in state tax revenue. The enormity of the racket suggested that it had been going on for several years with the connivance of senior officials, the sources said.

The investigation focused on the period after 2000, the sources said, expressing the belief that the law enforcement authorities and Commission to Investigate Allegations of Bribery or Corruption would promptly act on the report.

The CID probe on the VAT scam first revealed by the AG’s Department early June last year did not get underway till the JVP raised the issue in Parliament late December. Kamil Kuthubdeen, a key suspect wanted in connection with the VAT scam is believed to have fled the country. However, his brother, a former employee of the Media Ministry during the UNF administration is in custody along with several others including two senior Inland Revenue Department officials.

Some leading businessmen are implicated in the Rs. 360 billion fraud, the Sunday Island learns. Among them are a leading vehicle importer accused of submitting false documents, particularly in the import of luxury diesel vehicles. Procedure had been manipulated, thereby avoiding taxes under certain categories, the sources said. While avoiding the tax, customers had been charged for the same, thereby acquiring huge profits, the sources said.

The investigation has sent shock waves through the business community with several leading importers of goods and service providers caught up.

The AG Department welcomed the VAT scam detection made by the police. In addition, police have also cracked a massive racket involving several senior officials of the Inland Revenue Department. IGP Chandra Fernando Thursday said they detected the fraud in the now defunct tax regime, the Goods and Services Tax. He said that several arrests were imminent.

According to him the racketeers had cheated the government of at least 400 million rupees with the connivance of officials.

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