MP: Illegal Sale and Transport of Paan Masala, Cigarettes Using Press Vehicles During Lockdown, says DRI

Bhopal: In phase four of the nationwide lockdown imposed to control the spread of COVID-19 in the country, when transport of only essential commodities was allowed, Indore collector on May 20 issued an order to transport paan masala (gutka) within the state after adding the item to the essential commodities list.

The order issued by the Indore collector on May 20 says, “In view of previously issued orders of essential commodities, the district administration is allowing the transportation of paan masala from May 21 to May 27 between 11 am to 5 pm within the State. The decision has been taken to transport the item after seeing the large stocks of paan masala among the traders of Siyaganj (Indore) which may expire due to the summer season.” According to reports, nearly 70 trucks transported paan masala to other cities of the state in the midst of lockdown after the order.

The following month, acting on a tip-off, the Directorate General of GST Intelligence (DGGI), Madhya Pradesh, conducted two separate raids at the paan masala and cigarette units of Indore’s biggest manufacturer of these items, Kishore Wadhwani, and detected massive tax evasion.

Indore-based businessman Wadhwani, who has been accused of GST evasion to the tune of Rs 233 crore for the illegal sale of gutka and allied products, also evaded tax of about Rs 105 crore by clandestinely manufacturing and supplying cigarettes, the DGGI alleged on Monday, in a press release.

The DGGI booked Wadhwani under Sections 41(1), A, B, C, D of the Goods and Services Tax and Sections 409, 467, 471, 120 (B) of the Indian Penal Code and arrested him from a plush hotel in Mumbai last week.

Wadhwani, who also runs a newspaper and a TV channel in Indore, was sent to judicial custody until June 30 by an Indore court after his five-day police remand ended on June 22. Wadhwani was earlier remanded in the custody of DGGI and the Directorate of Revenue Intelligence (DRI).

After the interrogation, the DRI had stated that Wadhwani and his associates allegedly violated lockdown and transported illegal consignments of paan masala, tobacco, and raw material in Madhya Pradesh and nearby states in vehicles marked “on press duty’’. Five persons, including three who allegedly fronted for Wadhwani by running manufacturing units for him, were arrested.

Indore collector Manish Singh said the district administration didn’t issue press stickers to the newspaper owned by Wadhwani. And since he was busy in tackling the Covid-19 crisis, the ADM was issuing transportation passes, he claimed.

After the arrest of Wadhwani, social activists and Congress leaders have begun pointing to the role of district collector for helping Wadhwani in transporting paan masala during lockdown.

‘Government should conduct independent probe’

Congress leader and advocate Vivek Tankha tweeted: “Is it true that DRI found that 70 trucks were allowed to transports to other cities in the midst of the pandemic from Indore, which has been an epicentre of the Covid-19 cases in MP and collector Manish Singh talked more than 50 times in between?”

Another Congress leader KK Mishra demanded an independent probe in the alleged role of Singh for allowing the transportation of illegally manufactured paan masala and cigarettes out of the district in the lockdown.

Social activist Ajay Dubey questioned when transportation and consumption of paan masala, cigarettes were prohibited across the country, why Indore collector Manish Singh issued an order to transport it. “Why did he put the paan masala in the essential commodities list?”

“This is a serious issue. CM Shivraj Singh Chouhan should conduct an inquiry and take immediate action against the offender,” Dubey said.

He also released several photos of Wadhwani with the Congress and the BJP leaders claiming that the accused has close association with politicians.

DGGI findings

The Directorate of Revenue Intelligence and the Directorate General of GST Intelligence have so far found that Wadhawani allegedly evaded tax over the last many years and during the recent lockdown, manufactured and supplied gutka and other products from his own manufacturing units, as also from units run by four people who fronted for him.

The agencies estimate tax evasion on gutka, other products, and raw material of about Rs 400 crore. During their probe, the agencies stumbled upon Ellora Tobacco Company Limited, which manufactured cigarettes. The factory located at Sanwer Road, Indore, had a “secret rear exit” from where raw material unaccounted for was allegedly brought in and finished goods removed, said the DGGI press release on June 22.

After the interrogation of the factory supervisor, accountant, and staff, the agencies estimated that less than 5% of the production has been accounted for in the last many years. The major buyers even for the accounted production have been found to be fictitious, the Bhopal regional unit of DGGI alleged.

Ellora Tobacco had paid GST of only Rs 2.09 crore. Five more premises connected with the unit were searched in the third week of June, which led DGGI to arrive at the estimate of Rs 105 crore.

The total revenue evasion could be manifold and the extent would be clear only after completion of the investigation, the agency stated in the release.

The DGGI alleges that Wadhwani laundered huge amounts of illicit wealth in cash earned from paan masala/cigarette business by declaring the fraudulent sale of newspapers and also booked fictitious advertising income. Unlike the declared circulation of 1.25 lakh copies, the newspaper, investigators say, has a circulation of only 4,000 to 6,000.

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