15 March 2012 - A slew of raids by India’s income tax office on shipbreaking firms in Bhavnagar has once again brought ship breaking industry into spotlight.
Simultaneous raids and search/survey operations were carried out on various offices of Leela Ship Breaking, Shree Ram Group of Industries and Bansal Group in Ahmedabad, Bhavnagar in Gujarat, Mumbai and Pune.
Leela Ship Breaking is controlled by Komal Kant Sharma, the brother of Anil Sharma, founder and president of the largest cash buyer Global Marketing Systems (GMS), based in the US.
A senior official from Ship Recycling Industries Association (SRIA) told Fairplay, “The people raided are big players in the industry, so definitely there has been an impact. All the people involved in the business are interlinked. Although demolition work has resumed, it has not come back to its full potential.”
During the raid, officials seized Rs21M ($0.4M) cash and gold and silver jewelery worth Rs39M. Officials have also sealed 16 bank lockers owned by the breakers.
During the operation, they also recovered documents suggesting that a few associated with the companies have routed their unaccounted income into real estate projects in Gujarat.
According to Income Tax Department (IT) officials, the companies are suspected of under billing and unaccounted sales. A shipbreaker from Bhavnagar said there was a raid on the Bansal group about two months before this major raid.
He said: “This is not the first time the IT raid was conducted on shipbreaking firms. A few months back, more than two dozen shipbreakers, all based in Alang, where the world’s largest shipbreaking yard is located, were scrutinized by the IT department. This fresh raid is a follow-up action. There is large scale evasion of central and excise duty.”
Another industry player told Fairplay: “Certain practices have to be adapted to remain in trade to maintain good economies of trade. We have to reasonable to remain in business.”
In 2010, the Directorate General of Central Excise Intelligence (DGCEI) had searched 18 premises of 11 shipbreaking companies in Alang. Investigations found that several companies were involved in large-scale under-valuation of excise duty and issuing of fake central value-added tax (Cenvat) invoices