Two brothers who ran a paint manufacturing company used to file sales of stock without VAT under the acronym NJC - No Johnny Cash, a court heard yesterday.
According to police calculations, most of the company's sales bore the NJC marking and they go back to 1996, soon after VAT was first introduced.
Johnny Cash refers to the nickname given to Social Policy Minister John Dalli who was Finance Minister when he introduced Value Added Tax in Malta in 1995.
According to receipt books taken from the company, sales on which VAT was not charged amounted to Lm631,500 (€1.47 million) between 1996 and 2007, Police Inspector Angelo Gafà said.
He was testifying against brothers Mario and Gregory Brincat of Sta Venera and Madliena respectively who stand charged with evading VAT through their company S&R Ħandaq Ltd, a manufacturer of paints and varnishes.
Gregory Brincat is a former deputy mayor of Swieqi for the Nationalist Party, which was in power when VAT was introduced 14 years ago in the face of opposition from the business community.
Mr Gafà said investigations began in 2007 when one of the company's employees was char-ged and convicted of misappropriation. During interrogation, he revealed how the company he had worked for used to sell products without charging VAT. Subsequent investigations and a search at the company's offices revealed that S&R Ħandaq Ltd had a computer system to register sales and another separate sales register for bearing the acronym NJC.
Several employees questioned by the police, including secretaries and accounts clerks, spilt the beans on the company's practice, adding that all NJC sales were authorised and signed for by Gregory Brincat, the company's managing director. His brother is production manager.
Joanne Hafley, director of operations at the VAT Department, said that, based on the police investigations, the department estimated undeclared VAT at €105,896. Due to legal restrictions, the department could only go back six years, covering the period January 1, 2002 to September 30, 2007.
In addition, the company was charged a penalty equivalent to 20 per cent of what it owed and one per cent per month interest. In July this year, the company settled a bill of over €132,000.
Towards the end of yesterday's sitting, the prosecution asked the court to freeze the assets of both the accused and also those of the company in terms of the Money Laundering Act.
The defence team objected, saying the provision to request the freezing of assets was non-existent when the alleged crime took place.
Magistrate Doreen Clark said she would decide on the request at a later stage.
The case continues.
Lawyers Stephen Tonna Lowell, Joseph Giglio, Giannella Caruana Curran and Gianluca Caruana Curran appeared for the accused.