The Central Crime Station (CCS) police of Hyderabad has booked a case against former Chief Secretary Somesh Kumar and two senior officers of the Commercial Taxes Department: Deputy Commissioner A. Siva Rama Prasad and Additional Commissioner (State Taxes) S.V. Kasi Visweswara Rao, in a ₹1,000 crore Input Tax Credit scam.
The complaint was lodged by K. Ravi Kanuri, the Joint Commissioner (CT) of the Central Computer Wing, Nampally, alleging the GST fraud on July 26. The FIR has also named ‘Plianto Technologies’ and Sobhan Babu, assistant professor at Indian Institute of Technology (IIT)-Hyderabad.
The case came to light during an audit by the Commercial Taxes Department, indicating discrepancies in the tax returns filed by ‘Big Leap Technologies and Solutions Private Limited’. The entity, ostensibly engaged in manpower supplies, has been accused of passing on Input Tax Credit (ITC) without making the corresponding tax payments, resulting in a significant loss to the State exchequer, Mr. Kanuri stated in his complaint to the CCS.
The bigger picture was revealed when the Commercial Taxes Department looked at IIT-H, which was engaged as a service provider to develop a software for analytics and discrepancy reports-based on tax returns filed by goods and service taxpayers in Telangana.
“As the audit has revealed discrepancies with Big Leap Technologies that were not identified by the ‘Scrutiny Module’ developed by IIT-H, it prompted the department to authorize an officer to visit the premises of IIT-H for further inquiry. The report of the visit, citing various procedural lapses, highlighted issues such as the lack of documentation for software changes and reliance on oral instructions from senior officials, including the then Chief Secretary Somesh Kumar, and S.V. Kasi Visweswara Rao, A. Siva Rama Prasad,” said the police.
Notably, the reports of the Scrutiny Modulefailed to capture discrepancies related to Integrated GST (IGST), resulting in revenue losses. The involvement of Plianto Technologies was also scrutinised, as operations related to the Commercial Taxes Department were conducted under their banner within IIT-H premises.
“However, Plianto Technologies denied any software development for the department, raising further questions. To investigate the matter, the agreement between IIT-H and the Commercial Taxes Department was audited, revealing deficiencies such as unclear specifications, lack of timelines, and unclear payment terms. It was also noted that IIT-H had control over data, allowing potential data manipulation to favor specific firms,” added the police.
Instructions via a WhatsApp group
Further scrutiny by the police revealed that the Project Investigator & Assistant Professor Sobhan Babu, took instructions via a WhatsApp group named ‘Special Initiatives,’ with Somesh Kumar, Visweswara Rao, Siva Rama Prasad, as its members. Commercial Taxes Department issued an urgent memo to Visweswara Rao and Siva Rama Prasad directing them to explain the composition of the group and the changes made to the software based on the directions issued in the group. They furnished a reply stating that the group operated under the supervision of Somesh Kumar and had been inactive since December 2022. “However, the group was reportedly found active until February 2024. The WhatsApp chat history indicated that reports estimating IGST losses were generated, with instructions issued not to cancel registrations even in cases of fraud. Following these revelations, mobile phones of the individuals involved were seized to prevent potential data manipulation,”explained the police.
Police, in their FIR, alleged that one such masked case was that of Telangana State Beverages Corporation Limited. Furthermore, evasion of over ₹1,000 crore was unearthed through fraudulent cases detected in the State.
Forensic audit
As per the FIR, the forensic audit conducted by the Centre for Development of Advanced Computing (C-DAC) exposed severe data manipulation practices. It was found that specific Taxpayer Identification Numbers (TIN/GSTIN) and officer employee IDs were hardcoded into the software, which could facilitate selective tax evasion. Furthermore, there was evidence of unauthorised access to proprietary data of the Commercial Taxes Department, which had been transferred to a third-party server with the IP address located in Hindupur, Andhra Pradesh.
The investigation also revealed that there were unauthorized changes in taxpayer jurisdictions, allegedly to benefit certain individuals and firms. “For instance, Duet India Hotels (Hyderabad) Private Limited was shifted to a jurisdiction reportedly favorable to them, with advance rulings issued that benefited the taxpayer. These changes were allegedly made without the necessary approvals from the Commissioner of State Taxes, as required by law,” stated the police.
The forensic report also indicated that employees purportedly working under IIT-H for the Commercial Taxes Department were actually on the payroll of Plianto Technologies. This finding contradicts the contractual terms and raises questions about the legitimacy of the expenses and the roles of the involved personnel.
The Commercial Taxes Department has initiated further investigations, requesting a forensic audit of the applications and database used by IIT-H. The audit aims to uncover any additional discrepancies or data manipulations that may have occurred. A preliminary report has already highlighted potential collusion between the officials and the involved firms, suggesting a broader conspiracy,” explained the police.
Meanwhile, in response, IIT-H has stated that all their actions were guided by instructions from the department officials and the former Chief Secretary. They have provided documentation supporting this claim, including communications where draft notices omitted crucial components like the Integrated GST (IGST).
Published - July 29, 2024 12:26 pm IST
