The Central Board of Indirect Taxes and Customs plans to verify whether the export, purchase or sale of illegally mined minerals evaded payment of central excise, customs duty and service tax in the pre-goods and services tax regime.
An official told that the action relates to a case filed in the Supreme Court in 2009 to curb illegal iron ore mining in Karnataka. The tax department is also considering to become a party to the ongoing case in the Supreme Court.
After a writ petition was filed in the apex court in 2009 seeking ban on illegal mining of iron ore, the court referred the matter to Central Empowered Committee to redress grievances over steps taken by the government. The CEC recommended forming a monitoring committee to supervise the sale of illegally extracted iron ore, nearly 29 million metric tonnes of which was seized from 2006-10.
According to Karnataka Lokayukta, an anti-corruption ombudsman, the value of the illegally extracted iron ore was Rs 12,228 crore, based on the average price of the commodity and foreign exchange value over the period.
The tax department wants to examine indirect tax implications on transactions, such as collecting customs duty, central excise and service taxes on the sale, export or purchase of illegally mined iron ore, whether the customs duty and GST were collected on export, purchase or sale of legally mined minerals made through monitoring committee in the GST regime.
The tax department wants to understand these transactions and verify if the tax liabilities have been discharged.
The Department of Revenue Intelligence may be asked to check collection of customs duty for illegal iron ore that was exported.
An official stated that the tax authorities also plan to levy a penalty of 100 percent of the value of illegally mined iron ore on which taxes were evaded. Penalty can be imposedon tax evaded in past transactions, a tax demand cannot be raised after five years of the relevant date.
This would be on companies that extracted iron ore beyond their leased areas, where taxes on ore extracted from illegally encroached area would have been evaded. During 2006-2010, there was unchecked export of illegally extracted iron ore from border areas of Andhra Pradesh and Karnataka, which would have escaped the payment of customs duty.
Vedanta-owned Sesa Goa and state-run KIOCL Ltd.were found exporting iron ore after issue of permits was banned.
