The oil companies make supplies to these traders based on these certificates. It is virtually impossible to track down each and every consignment and the sales tax department must ensure that traders do not indulge in malpractices". The oil industry's contention is that there are means of knowing that the parties concerned are fictitious. They say that even prior to the CBI stepping into the picture, there were cases of supplies being suspended when it was found that there were non-existent customers.

The issue which is under CBI review relates to supplies made to two categories of customers: a) processors which use high speed diesel (HSD) as raw material and b) machimar societies which draw HSD for fuel by fishermen. The CBI has contended that the fuel has been supplied to these buyers at concessional rates which have been diverted for other uses. Supplies have also been made to non-existent units on a concessional sales tax basis. In its defence, the oil industry says that all precautions are taken while catering to HSD supplies. It first verifies the approval of the explosives department for storage of the product. If the supplies are required on inter-state basis, the oil companies check the central sales tax registration certificate for assessing the customer's eligibility to receive supplies on concessional sales tax.