Yarn dealers in the country's biggest man-made fabric (MMF) industry have come under the scanner for the large scale evasion of value added tax (VAT).

The flying squad officials of the Ahmedabad VAT department on Tuesday carried out extensive raid operation on over 35 yarn dealers in the city's Ring Road, Zampa Bazaar, Gopipura and Salabatpura market areas.

Sources said the yarn dealers have been bringing polyester filament yarn from the neighbouring Maharashtra without paying the entry tax. The yarn stock brought in the city was allegedly sold without issuing any invoices to the customers.

The VAT department had received information regarding the widespread evasion of VAT by the yarn dealers in the city. However, a raid operation was conducted on over 35 yarn dealers.

Sources said that the yarn manufacturers have been delivering their goods directly to the yarn dealers and weavers. Thousands of tones of yarn is being sold in the city on daily basis and that the yarn dealers and manufacturers indulge in widespread tax evasion by doing irregularities in the invoice and challans.

"The state government has imposed entry tax on the products entering from other states. However, the yarn manufacturers and dealers evade paying entry tax and that they sell the yarn stock without issuing legal invoice and challans to evade VAT" said a senior officer.