Shimla, Apr 29 (IANS): Himachal Pradesh government's Department of State Taxes and Excise on Saturday conducted inspections at three firms in Kala Amb in Sirmaur district, which are part of a network of approximately 300 firms spread across five states.

The network of 300 firms has carried out transactions of more than Rs 8,300 crore, having availed and passed on input tax credit of more than Rs 1,500 crore, an official statement said.

The firms in the network have been discharging insignificant portion of their tax liability through payment of cash. They have been disclosing that most of the liability of tax has been discharged by them through input tax credit.

The Economic Intelligence Unit (EIU) of the Department State Taxes and Excise did the data mining across various available sources and arrived at the conclusion that a complex web of transactions among these 300 entities was created to pass on fake or ineligible input tax credit.

As a pattern, these newly-registered entities were disclosing huge amounts of transactions in a short span of time and then getting themselves cancelled. The entities at the beginning of supply chain have never made payment of the tax to the government.

Moreover, a significant number of entities at the beginning of the supply chain have been cancelled retrospectively by tax authorities, implying the declaration of fake paper transactions by these entities.

Further, some of the partners of these firms were found engaged in tax evasion activities earlier also, wherein demands were imposed by the department, said the statement.

The inspections are being carried out by around 24 officers from three districts at three different locations in Kala Amb.

Prima facie it appears that two entities with the support of the third entity availed and passed on ineligible input tax credit of up to Rs 250 crore to other taxpayers.

Further, action against the network will be taken as per the provisions of the Goods and Services Tax (GST) law, the statement added.