Mumbai: The department of Central Goods and Services Tax has accused - Shemaroo Entertainment Pvt Ltd and its office bearers- Joint managing director Atul Maru, Chief Executive Officer and director Hiren Gada and Chief Financial Officer Amit Haria of alleged evasion of Goods and Services Tax (GST) to the tune of Rs 133.60 crores through 20 bogus firms.
Maru, Gada and Haria were arrested on September 6, 2023 for the alleged GST fraud. They were granted bail on the next day by a magistrate's court. The department has moved the sessions court for cancellation of their bail which is pending for hearing. The agency has alleged that the three are the masterminds of the alleged fraud causing loss to the government.
Prosecution Complaint Alleging GST Evasion By Shemaroo Entertainment
The department has recently filed a prosecution complaint against the firm and its executives wherein it is alleged that a total 20 bogus firms were created through which they evaded the GST to the tune of Rs 133.60 crores.
"Investigation conducted so far, indicates that the accused, namely, Shemaroo Entertainment Limited, Maru, Gada and Haria have actively been involved in establishing and managing fraudulent business entities and indulged in availment and utilization of ineligible input tax credit (ITC) to the tune of Rs. 133.60 crores. The accused have also availed input tax credit from non-existent suppliers whose registrations, were cancelled suo-moto / ab-initio thereby causing loss of revenue to the government exchequer," the department said in its complaint.
GST Invoicing Fraud And Bogus Firms Linked To Shemaroo Entertainment
The department has further said that, "Shemaroo Entertainment Limited have committed the offences both as recipient and suppliers, as invoices charging GST were received and issued showing taxable supply."
"Shemaroo Entertainment Limited has availed Input Tax Credit total amounting to 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 Input Tax Credit total amounting to Rs. 63.34 crores on the strength of invoices raised by them to 20 bogus firms without any supply of goods/services," the department has said.
" Shemaroo has issued invoices without actual supply of goods or services to these 20 bogus firms," reads the complaint. The agency claimed 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 GST Department on the same address at Andheri (East). The agency claimed that the four firms had business of more than Rs 140 crores with few companies. The agency then began scrutinising these firms. The firms were owned by former employees of Shemaroo.
Tax Credit Fraud Scheme Uncovered By Investigation
During the probe, Maru admitted that he, Gada and Haria were responsible for creating multiple dummy firms and they created the said firms in the name of former employees on paper only for availing and utilisation of Input Tax credit without supply of any goods and services.
The agency further claimed that former workers of Shemaroo Entertainment - Jhaverchand Soni and Vijay Vira - were lured into creating fake firms for ultimate benefit of Shemaroo Entertainment. These two, who formerly worked as employees, managed to establish multi crore businesses within a very short span of time without having the requisite expertise or capital, the agency said adding that when asked the two had not submitted any details of the firms, which indicated that the firms never really existed.
