Raid on gutkha production firm in MP reveals it donated ₹200 cr to a political party ahead of Assembly polls

The Economic Offences Wing (EOW) of Madhya Pradesh is looking into financial irregularities concerning a ‘gutkha’ production company which allegedly donated ₹200 crores to a political party last year ahead of the assembly elections.

On January 11, a 25-member team of the EOW raided the production units of Rajshri Gutkha, Kamla Pasand and Black Label Gutkha as early as 4 am at two units located in Govindpura Industrial Area of Bhopal. Later, the EOW sent some documents recovered by it to the Income Tax Department and the Department of GST for evaluation.

Based on the findings of the recovered papers, the concerned departments submitted its report to the EOW which reveals huge donations made to a political party over the years. In addition to that, the report found that financial and other anomalies at the gutkha manufacturing units went unnoticed for years as officials of various departments looked the other way.

On the basis of the reports submitted by the Electricity Department, the Food and Drug Department, Income Tax Department and Weight and Measurement Department, the EOW will in all likelihood register an FIR against the industrialist and some government officials on Thursday.

The factory owner, Kamal Kant Chourasia, a resident of Kanpur and franchise holders Sheikh Mohammad Arif and Vaibhav Pandey — residents of Bhopal — kept the political party in good humour by giving it huge donations. If at all they faced any administrative issues, the politicians used their clout to ‘manage’ the officials and settled things.

According to sources, enjoying this political patronage, the gutkha industrialists ran their business keeping all norms at bay and allegedly evaded taxes to the tunes of crores of rupees. For years, the officials of GST (tax department) did not visit the factory and if at all they came, they remained confined to the office, making cursory checking of documents.

It is claimed that the Electricity Department did not conduct any audit in the last seven years. It was ten years back that the Food and Drug Department had collected any sample; no one took the pain to visit the factories in the last many years. The officials of Weight and Measurement Department too paid a visit to the factories five years ago.

When contacted, SP, EOW, Arun Mishra said, “Massive irregularities have been found from the recovered documents. Based on the findings of the IT Department, we will take further action and may register FIR against the owners of the factory.”

He further said, “The reports submitted by the IT Departments revels that the gutkha factory owners have given massive amount (around ₹200) to a political party ahead of assembly elections.”

Assembly elections in the state were held on November 28, 2018.

Violation of norms

Sources said that the Food and Drug department had found adulteration in the gutkha. The Labour Department has come across violation of ‘child labour’ norms at the factory. A case regarding the same would be filed against the factory management. The Weight and Measurement Department found a disparity in content in the pouch and the quantity mentioned. Case of electricity theft would also be filed against the gutkha units as they were running on the improper power load. The department will also impose a penalty and file a case against the owners.

What EOW found during the raid?

During the raid on January 11, 2020, the team of EOW recovered uncounted stock of more than ₹100 crores from the godown of the factories, said sources. The MP GST officials have been called to assess the tax evasion which is likely to cross ₹500 crores. In order to cover the production quantity, the machines were tampered with.

To evade taxes, the factories were showing much less production than the actual quantity.

Around 500 workers, mostly residents of Uttar Pradesh, Bihar, Jammu were found engaged in production at the time of raids. Some child labourers were also found working at the factories and the officials have apprised the labour department about the same. After the team detected adulteration in the gutkha, officials of the Food and Drugs department has been called to check the product quality.