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Sleuths of Central Goods and Services Tax (CGST) Commissionerate Vadodara -II arrested Manpasand Beverages Limited (MBL) Managing Director Abhishek Singh and two others on charges of GST fraud worth ₹40 crore on Friday.
A CGST statement, released on Friday, stated that multi-locational searches were conducted on various premises of MBL on May 23, following which a racket of creating fake/dummy units for availing fraudulent credit and committing tax evasion of ₹40 crore involving turnover of approx ₹300 crore had surfaced.
The officials from the Commissionerate arrested Harshvardhan Singh, brother of Abhishek Singh and company's Chief Financial Officer Paresh Thakkar after a detailed investigation.
The trio were produced before the court on Friday and were sent to judicial custody.
The investigation revealed a network of over 30 fake or bogus units, located in various parts of the country, which were used for committing fraud by availing illegal credit. The investigation regarding ultimate beneficiary of the fraud and web of shell companies is under progress, the statement said.
Listed on the stock exchanges, MBL has a market capitalization of ₹1,200 crore and reported total standalone income of ₹985 crore for the year 2017-18, with a net profit of about ₹100 crore.
Notably, a meeting of the company’s Board of Directors is scheduled on May 28, to consider and approve its Audited Financial Results along with an audited report for the fourth quarter and year ended March 31, 2019.
Under scanner
Exactly a year ago in May 2018, the company had come under scanner with the sudden exit of its auditors Deloitte Haskins & Sells India amid suspicious turn of events. It was understood that the auditors were upset due to the company’s lack of transparency and cooperation in sharing crucial data on its capital expenditure and revenues.
It is unusual for an auditor to resign halfway through an audit — that too just before the finalisation of the annual financial accounts.
Following this development, MBL stock prices lost ground, eroding crores in market value for the company’s investors. The stock prices tumbled from its 52-week peak of ₹458.75 on May 25, 2018 to a low of ₹52 in February 6, 2019.
The MBL stocks quoted at ₹110, up nearly 5 per cent at Friday's close.
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