Mumbai: Joint managing director of Shemaroo Entertainment Atul Maru (62) has in his statement given to the department of Central Goods and Services Tax (CGST) admitted that he and others entered into transactions through fake companies to inflate their turnover so that they could get bank loans at lower interest rates.
The CGST department has recently submitted a prosecution complaint against Shemaroo Entertainment Pvt Ltd and its office bearers which included Maru and Chief Executive Officer and director Hiren Gada and Chief Financial Officer Amit Haria for alleged evasion of Goods and Services Tax (GST) to the tune of Rs 133.60 crores through 20 bogus firms.
CGST's Claims Against Shemaroo Entertainment
The department has claimed that Shemaroo Entertainment Limited has availed Input Tax Credit (ITC) totalling Rs 70.25 crores on the strength of invoices raised by 20 bogus firms without any supply of goods and services. Further, Shemaroo Entertainment has passed on ITC amounting to Rs. 63.34 crores on the strength of invoices raised by them to 20 bogus firms without any supply of goods/services.
During the investigation the agency recorded statement of Maru on September 6, 2023. The agency had asked him ,“It is gathered by the department that you have created some firms on paper only for availing and passing of Input Tax Credit without supply of an Goods or Services. Please explain why have you done the same?."
Shemaroo Entertainment's Maru Defends Transaction Method
In the response, Maru admitted of having created firms on the name of former employee Jhaverchand Soni and his wife, on paper only. “We created said firms on paper only for availing and passing of Input Tax Credit without the supply of Goods or Services, however, we have fulfilled all the compliances such as making payment against the purchase bill from the bank account of M/s Shemaroo to the bank account of the firms created on the name of Soni and his wife. We have also filed necessary GST returns like GSTR 1 and 3B with respect to the said firms created by us,” Maru said in his explanation.
Maru Justifies To CSGT Dept Of No Tax Evasion
He further justified that, “Only apart from procurement of services and goods, we have done all the necessary compliance on paper. As such, as far as my knowledge, there is no any tax evasion. Further I want to add that the main purpose of doing the said business transaction is to inflate our turn over for improving our credit rating which helps us in getting lower loan interest rates from the banks.” Maru however, also added that for creating the said firms they never had any intention to evade any taxes.
