Thursday, November 26, 2009

Chicken scam busted

Chicken traders involved in multi-crore tax rip-off

Chicken may become dearer in Kerala after the officials busted the multi-crore Nadupunni tax evasion fraud. The authorities cancelled registration of some 12 chicken traders after coming to know that they were issuing fake cheques towards advance tax in the guise of pay orders.

This will have an adverse impact on the local chicken market, resulting in spiralling prices. Kerala is the only state where tax is levied on chicken and they are mostly transported from Tamil Nadu.

The number of vehicles carrying poultry has been reduced after the Kozhinjampara incident. The police seized some trucks that were transporting chickens from Tamil Nadu through by-routes without paying taxes. The seizure was part of an operation to root out corruption at Naduppuni checkpoint on the Kerala-Tamil Nadu border in Palakkad district and the Muthanga checkpoint in Wayanad. Some chicken traders, officials and fake document makers were involved in the tax rip-off.

The modus operandi was simple: Cheques were issued in the guise of pay orders and were handed over as advance tax for vehicles transporting chickens from Tamil Nadu and Karnataka to Kerala. After that they were forwarded to the Treasury from where they were presented at State Bank of Travancore (SBT), Chittur, and then sent by post to Palakkad.

From there they were parcelled to the clearing house and then to the issuing banks. The process was cumbersome and would take 30- 45 days. This was exploited by the fake cheque mafia. Official sources say the SBT is to pay around Rs 16 crore to the government. The loss incurred by Muthanga checkpoint is reported to be Rs 8.5 lakh. The branch manager of the Chittur branch of State Bank of Travancore has already been suspended for not releasing cheques on time. Some 30 officials have been suspended.

Learning a lesson from the fraud, the government is now busy putting in a foolproof mechanism so that tax evaders can by fixed. Hoping to rectify their mistakes, the government has again introduced demand draft system for transportation of chickens through checkpoints.

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Source :
IIPM Editorial, 2009

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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