The Directorate General of Goods and Services Tax Intelligence (DGGSTI), Pune, arrested Madhukar Pathak, chairman of MP Group, on October 16 for alleged non-payment of “Rs 6.94-crore service tax”, said sources familiar with the development. Pathak, the Pune-based businessman, has been arrested under Section 91(1) of the Finance Act, 1994. The DGGSTI alleged that Pathak’s firm, MP Enterprises & Associates Ltd, had indulged in “fraud and suppression” of taxable value for the last few years. According to the agency, MP Enterprises & Associates “fraudulently re-utilised the same challans of Rs 3.44 crore” for the payment of service tax liability of two different financial years.
“In another instance, the firm charged service tax on full rate but accounted it in its books of account on a much lower abated value by falsification of their financial records,” said Ripusudankumar, the investigating officer at DGGSTI. The probe has found that the company has allegedly evaded service tax of Rs 1.49 crore using this modus operandi. Apart from this, the agency has found that MP Enterprises & Associates has “short paid” service tax of about Rs 2 crore. “Further investigations are in progress and the amount of service tax evaded by MP Enterprises & Associates Ltd is likely to go up substantially as investigation is extended to cover their 140 clients,” said Vaishali Patange, Deputy Director at DGGSTI, Pune.
“Such cases of blatant tax evasion, wherein the tax is collected from the customers and not paid to the government, have come into more focus as a result of the public awareness campaign launched by the government in recent past, before and after the implementation of GST,” said Patange. Pathak has been sent to judicial custody until October 23.
MP Group is a registered service provider engaged in integrated support services. It also provides manpower recruitment services, rent-a-cab services and security/detective agency services. Last year, the group won a 10-year contract from Noida Metro Rail Corporation (NMRC) to run 100 smart buses on different routes under the smart cities initiative. The group currently ferries 16,000 employees to their offices and covers more than 20 lakh kilometres on road every day with its network of cabs, tempo travellers and buses across Pune and Mumbai.