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December 7, 2020

GST investigators uncover fraudulent transactions of Rs. 290 crore

by CA Shivam Jaiswal in GST

GST investigators uncover fraudulent transactions of Rs. 290 crore

As a follow-up of the detection of a non-existent Advertising Firm in Dhule which had availed and passed on fake ITC, searches were conducted at the premises of a Mumbai based Private Limited Company M/s M& M Advisors & Consultants Private Limited and at the residences of its Director and Chartered Accountants. This Company was registered for Licensing services for the right to broadcast and show Movies.

The searches uncovered a number of documents, the examination of which revealed that the Company was engaged in Licencing of Movie Rights of Film Production Houses for broadcasting on National and International Channels and had declared itself to be the Sole Rights Holder of Movies produced by big Production houses. The Company was purchasing the rights of Movies produced by the top Banners and was transferring these rights under Contract system to Rights Assignors, who was availing Input tax Credit.

Preliminary scrutiny of the documents revealed that this Company had undertaken fraudulent transactions of Rs. 290.70 Crore and had passed on fake Input tax Credit of Rs. 25.22 Crore to Rights Assignors, the ultimate beneficiaries.

During investigations, the Rights Assignors paid the entire Input Tax Credit of Rs. 25,22,62,786/- in Cash, which was the Input tax Credit passed on by this Company.

The Director of the Company Shri Pradeep Ashok Malankar who on inquiries with the Ministry of Corporate Affairs was found to be the Director of 3 more Companies, was arrested on 5th December, 2020 and has been remanded to Judicial Custody by the Hon’ble Court till 18th December, 2020.

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