MP: Gutka Company Donates Rs 200 Cr To Political Party Ahead Of Assembly Elections, EOW Begins Probe

The Economic Offences Wing (EOW) of Madhya Pradesh on Thursday night booked four directors of Kaipan Pan Products Private Limited for allegedly evading GST worth Rs 1900 crore through fraudulent means under section 420 (forgery), 120 (criminal conspiracy) of IPC or and 122 of GST Act.

Confirming it, EOW DG Sushovan Banerjee said, "strong steps would be taken against those involved and the directors have been booked under relevant sections of IPC and GST Act."

The EOW was looking into the financial irregularities at a Gutaka manufacturing company which had allegedly donated Rs 200 crore to a political party last year ahead of the assembly elections.

On January 11, 25-member sleuth of the EOW raided the Gutka production units of Rajshri Gutkha, Kamla Pasand and Black Lable Gutkha as early as 4 am in two units located in Govindpura Industrial Area of Bhopal. Later, the EOW sent the recovered documents to the Income Tax Department for the evaluation.

Based on the findings of the recovered papers, the Department of GST submitted its report to the EOW which revealed huge donations made to a political party over the years. In addition to that, the report found that the financial anomalies at gutka manufacturing units went unnoticed as officials of departments concern did not step into the units for years.

The reports submitted to the EOW by the Electricity Department, the Food and Drug Department, Income Tax Department and Weigh and Measurement Department also highlighted massive irregularities for years and in all likelihood, FIR will be registered against the industrialist including some of the government officials on Thursday.

Owners of the factory Kamal Kant Chourasia, a resident of Kanpur, franchise holders Sheikh Mohammad Arif and Vaibhav Pandey, residents of Bhopal, kept the political party in good humour giving huge donations. In case of any administrative issues, the politicians are said to have used their clout to manage the officials and settle issues.

According to the sources, enjoying political patronage, the gutka industrialists ran their business keeping all rules at bay and allegedly evaded tax to the tune of crores of rupees. For years, the officials of GST (tax department) did not visit the factory and if at all they came to the factory they remained confined to the office cursory, checking the documents.

It was claimed that the electricity department did not conduct any audit of the premise in the last seven years. It was ten years back that food and drug department collected samples. No one took the pain to visit the factories in the last many years.

The officials of weight and measurement department paid a visit to the factories, but five years ago.

When contacted, EOW SP, Arun Mishra said, "Massive irregularities have been found from the recovered documents. Based on the findings of the IT Department, we will take further action and may register FIR against the owners of the factory."

He further said, "The reports submitted by the IT Departments reveals that the Gutka factory owners have given massive amount to a political party ahead of assembly elections."

The assembly elections in Madhya Pradesh were held on November 28, 2018.

Violation Of Norms

Sources informed that the Food and Drug department had found adulteration in gutka. The Labour Department came across child labour norms violations at the factory. A case regarding the same was to be filed against the factory management.

The Weight and Measurement Department found a disparity in the content of the pouch and the quantity mentioned.

Case of electricity theft was also filed against the gutka units as they were running on the improper power load. The department will impose a penalty and also file a case against the owners.

What EOW Found During The Raid?

During the raid on January 11, 2020, the team of EOW found an uncounted stock of more than Rs 100 crore from the godown of the factories, sources said.

The MP GST officials were called to assess the tax evasion which turned out to be more than Rs 500 crore. In order to cover the production quantity, the machines were tampered with. To evade tax, the factories showed much less productivity than the actual output.

Around 500 workers, mostly residents of Uttar Pradesh, Bihar, Jammu were found to be engaged in production at the time of raids.

Some child labourers were also found working at the factories and the officials had apprised the labour department about the same. The team has also gutka to be adulterated. Officials of the food and drugs department were called to check the product quality.

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