Hyderabad: The city police registered a criminal case against controversial former Chief Secretary Somesh Kumar for his alleged role in large-scale tax fraud by traders running into hundreds of crores of rupees.
According to police, Somesh’s decision to ignore the alerts issued in terms of wrongful claim of input tax credit under the IGST (inter-state sales) by a few traders and retaining their registration against the recommendation to cancel them, prima facie, established the criminal intent to help the traders, a move that caused loss of exchequer to the state.
The police also made two serving Commercial Tax department senior officials S.V. Kasi Visweswara Rao, additional commissioner (ST) and A. Siva Rama Prasad, deputy commissioner, and an assistant professor of IIT-Hyderabad Prof. Sobhan Babu co-accused in the case that will now be transferred to the Criminal Investigation Department given the inter-state transactions carried out by traders.
Somesh, who figured as Accused No. 5 in the First Information Report filed by the Central Crime Station, was booked under IPC Sections 406 (criminal breach of trust), 409 (criminal breach of trust by a public servant) 120B (criminal conspiracy) and Section 65 of Information Technology Act (tampering with computer source documents).
Prima facie police found that at least 11 companies, including the Telangana State Beverages Corporation, the wholesale supplier for liquor in the state, evaded `400 cr tax to the department but escaped its radar following the decision of Somesh not to track certain taxpayers as well as input tax credit claimed by traders under the IGST (inter-state sales).
The scam was unearthed following the detection of a wrongful claim of ITC of Rs 25.51 cr by manpower service provider M/s Big Leap Technologies and Solutions Private Limited and avoided payment of the same amount of tax to the state government.
“As a policy decision, Somesh, who was also serving as CTD commissioner, decided to track CGST and GST returns only for evasion, if any, and excluded IGST and Cess returns. But, the inquiries revealed that he did not act on alerts of wrongful claims under IGST and did not bring IGST component also on to the radar software and this may attract the provisions of criminal intent,” a senior police official pointed out.
The department engaged the services of IITH to develop and maintain a software that would flag the discrepancies in tax payment based on the data fed by the department including the returns, way bills and invoices. Police found that the premiere technology institute in turn hired employees who are on payrolls of a private company called Plianto Technologies Pvt Ltd.
The state audit department and the CDAC separately conducted a forensic audit and found that “the deficiencies in the agreement entered with IITH included lack of specifications, timelines, delivery dates, lack of clarity in payment terms.” It was also specifically stated that since the control of data is completely with IITH, there is every scope for modification of data to conveniently favor any firm, said the police.
IITH project investigator Sobhan Babu told police during the inquiries that Somesh created a WhatsApp group ‘Special Initiativesְ’ with Kasi Visweswara Rao, and A. Siva Rama Prasad as its members.
Initially, the officers resisted the attempts of the police to retrieve the data by seizing their mobile phones. They approached the Telangana High Court against the seizure but the latter dismissed their petition at the admission stage itself. This paved the way for the police to access the reports sent by the IITH flagging the tax evasion by the traders.
“On perusal of the Whatsapp Chat History, it was noticed that certain reports were generated estimating IGST Loss but instructions were issued not to cancel registrations even in fraud cases,” police pointed out.
The audit findings also included systematic exclusion of certain cases from generation of notices, multiple applications being hosted on the same server. Further, the forensic report also indicated the transfer of proprietary data of the Commercial Taxes Department to a third party without authorisation.
