Mumbai: The Department of Central Goods and Services Tax has moved the sessions court to seek the cancellation of bail for the joint managing director and two top executives of Shemaroo Entertainment Ltd who were booked for alleged tax evasion. Atul Maru, the joint managing director of Shemaroo, Hiren Uday Gada, the chief executive officer, and director of Shemaroo, and Amit Haria, the chief financial officer of Shemaroo, were arrested on September 6 for alleged GST fraud amounting to ₹70 crores. The three were produced before the magistrate's court on September 7, and the court immediately granted bail to them. The department has now approached the sessions court to request the cancellation of their bail.
In seeking the cancellation of bail, the GST department has stated that the magistrate's court failed to appreciate the prima facie documentary evidence against the three and the fact that they are being investigated for causing a ₹70.25 crore loss to the government exchequer. The sessions court has issued a notice to the three and asked them to respond to the department's plea by November 29.
Investigation reveals unusual transactions in firms linked to Shemaroo
The agency claims that the firms, namely M/s. Uttam Movies, M/s. Mangal Entertainment, M/s. JDS Motion Pictures, and M/s. JVS Media Solutions, are registered with the GST Department at the same address in Andheri (East). The department began probing these firms when it realised there was an unusually high amount of availing and passing of Input Tax Credit (ITC).
The department further initiated an investigation into Uttam Movies and questioned one of the partners and authorized signatory, Jhaverchand Soni. Soni, in his statement, claimed that he had worked with Shemaroo since 1988. He alleged that Maru had contacted him and offered to pay him and his wife a sum of ₹1.50 lakhs yearly and to simply sign papers of the firm for him. Soni said Maru stated that he would manage all the affairs of the firm and was also managing the accounts of the firm.
The agency claims that Maru, in his statement, admitted that they had created the said dummy firms in the name of Soni, his wife, and some other persons on paper only for availing and utilizing Input Tax Credit without the supply of goods or services. The agency further claims that ITC was availed through the said firms without procuring any services or goods, and the business transactions with the said dummy firms existed only on paper.
The agency also alleges that Maru, through these firms, availed ITC benefits amounting to ₹70.25 crores. 'They have availed ITC from fake suppliers whose registration was cancelled suo-moto/ab-initio/on application of the taxpayer, so as to cause revenue loss to the government exchequer,' the GST department said in its plea.