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NBW issued against director of top automotive cable manufacturer

Rajiv Malhotra, a director of Malhotra Cables, has been booked for tax evasion under Central Good and Services Tax Act

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In a case involving Goods & Services Tax (GST) evasion running into crores of rupees using fake invoices, Patiala House Courts on Wednesday ordered non-bailable warrants against Delhi-based businessman Rajiv Malhotra to appear before it on October 1.

Malhotra, a director of Malhotra Cables Private Ltd (MCPL), has been booked for tax evasion under section 132 of the Central Good and Services Tax (CGST) Act, 2017. His firm is a leading manufacturer and supplier of automotive cables to the automobile manufacturers. The company with a business share of 60% is supplying the material to all the major carmakers such as Maruti, Ford, General Motor, Volkswagen, Mahindra & Mahindra and also to two-wheeler manufacturers, as per the company's website.

The court ordered issuance of NBWs against the accused for October 1. "The accused is neither joining investigation with the investigating officer nor has he appeared before the court despite directions," Chief Metropolitan Magistrate Manish Khurana said in his order.

THE MATTER

  • Malhotra, a director of Malhotra Cables, has been booked for tax evasion under Central Good and Services Tax Act
     
  • The accused is alleged to have evaded an ITC of around Rs 45 crore by creating layers of dummy firms

The court also dismissed an application moved by Malhotra's lawyer seeking exemption for the accused from appearance citing an urgent business meeting at Mumbai, while informing that he is back from Dubai.

"It is not a reasonable justification for the accused for his absence today despite categorical directions," the court opined. The presence of the accused can not be secured without issuance of coercive process against him, it added while ordering issuance of NBWs against the accused.

Malhotra has not joined investigations and has been on the run for about six months ever since tax sleuths conducted searches on his premises in West Delhi, Bhiwadi and Manesar.

In May, the court had cancelled his anticipatory bail. The accused is alleged to have evaded an ITC of around Rs 45 crore by creating layers of dummy firms. The amount could be much more as the investigations are underway. The modus operandi used by the company for alleged tax evasion was to obtain fake invoices without any supply of goods taking place. Then it used them to availed ITC which was then used to set-off their GST liability arising on account of sale of the final product.

Investigations led by Commissioner (West) Ranjan Khanna and his team have revealed that MCPL had availed ITC on the basis of fake invoices issued to it by another Delhi-based firm named HyLink and some other dummy firms without supplying any goods to the cable manufacturer. During the process, fake purchases were allegedly made to get ITC. The credit was used by MPCL to set off liability on high-value products manufactured by Malhotra's company.

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