N. Rahul 
Hyderabad: The Hyderabad police has registered a criminal case against former chief secretary of Telangana, Somesh Kumar, for his alleged role in a fraud related to payment of input tax credit in Goods and Services Tax (GST) transactions.
The scam, estimated to be worth more than Rs 1,000 crore, is alleged to have taken place when Kumar was special chief secretary, revenue (commercial taxes), four years ago in the Bharat Rashtra Samithi (BRS) government. After his elevation as chief secretary, he continued to be in charge of all revenue-earning departments.
Joint commissioner of commercial taxes, K. Ravi Kumar, filed a complaint with the police detective department two days ago saying that Kumar, three other individuals and a firm were involved in favouring GST payers, resulting in a loss to the state exchequer to the tune of over Rs 1,000 crore.
Acting on his complaint, the police booked a case against S.V. Kasi Visweswara Rao and A. Siva Rama Prasad, additional commissioner and deputy commissioner, respectively, of the commercial taxes department; Sobhan Babu, an assistant professor at the Indian Institute of Technology (IIT)-Hyderabad; M/s. Plianto Technologies, a technology partner of commercial taxes; and Somesh Kumar as the fifth accused in that order.
They were booked under Sections 406, 409, and 120 B of the Indian Penal Code and Section 65 of the Information Technology Act.
Earlier in the year, Kumar was in the eye of another storm over the purchase of 25 acres of prime land, at a throwaway price, in the name of his wife Gyanmudra. The land was purchased at Rs 2.5 lakh per acre in the vicinity of Pharma City in Hyderabad’s outskirts where land prices shot up after the facility was notified.
Kumar belonged to the Andhra Pradesh cadre of the Indian Administrative Service (IAS) after the bifurcation of united Andhra Pradesh but worked in Telangana on an order of the Central Administrative Tribunal.
Telangana high court struck down the order and repatriated him to Andhra Pradesh on a petition filed by the Department of Personnel and Training of the Union government. He was the chief secretary of Telangana at the time.
Kumar submitted a joining report to Andhra Pradesh chief minister Y.S. Jaganmohan Reddy but took voluntary retirement immediately to return to the service of Telangana as an advisor to the chief minister K. Chandrasekhar Rao.
In the fraud of commercial taxes, it is alleged that the accused were involved in a criminal conspiracy to transfer input tax credit offered by Integrated Goods and Services Tax (IGST), which is a tax levied on inter-state purchases or sales of goods and services. The Union government collects IGST and distributes it equally among the respective states.
The complaint said the IGST module reflecting GSTR – 3B returns filed by taxpayers was missing in the software developed by IIT-Hyderabad in connivance with the accused. Only state GST and central GST returns could be found. The module was not inserted on oral instructions by Somesh Kumar and two other senior commercial tax officials.
GSTR – 3B was a summary return to declare GST liabilities of taxpayers for a particular tax period and discharge these liabilities. The absence of this module became a money-spinner for a number of traders in Telangana. They faked transactions across states by producing false tax invoices, mainly on steel, aluminium, and copper, which attracted 18% GST.
Without any physical movement of goods and services to other states, they claimed input tax credit on the basis of false invoices. The transactions were found to exist only on paper.
Traders in the inward states claimed an 18% input tax credit from the GST Council and shared it with their counterparts in Telangana who made outward sales.
The complainant also said the module on GSTR – 3B was specifically designed to check tax evasions and arrears of taxes due. It was supposed to be developed by IIT-Hyderabad as a scrutiny model to capture all IGST discrepancies. But the operations pertaining to commercial taxes were run in the name of M/s. Plianto Technologies as a technology partner on the campus of IIT-Hyderabad.
IIT-Hyderabad’s project investigator, Sobhan Babu, took instructions to omit the module in a chat on WhatsApp group “Special Initiatives” run by Kumar. It had only Kumar, Babu, and the other two commercial tax officials as members.
Unlike GSTR – 3B, two other formats of returns for taxpayers who make outward supplies and purchases made in inward states were maintained meticulously to strengthen the crime.
The entire plan was executed by employees of Plianto Technologies, using the computers at IIT-Hyderabad, which was actually engaged as a service provider for the development of software by the Commercial Taxes department. The employees were listed on the payroll of IIT-Hyderabad.
Kumar and commercial taxes officials were charged with masking sensitive data pertaining to taxpayers, issuing instructions not to cancel fraudulent cases, making proprietary data, like intellectual property rights, pertaining to the department available to a third party and favouring taxpayers.
Senior leader and former minister T. Harish Rao told The Wire that such cases on officials will badly affect the administration’s functioning. They will be scared of discharging their duties efficiently if the possibility of subsequent governments targeting them is at the back of their minds.
This was a clear case of targeting officials if chief minister A. Revanth Reddy’s warnings to them as an opposition leader were to be recollected. “You can go against them if it was done intentionally. But, the Congress government has targeted them solely because they enjoyed high positions with us. Tomorrow, it can happen with you also,” he remarked.
Senior BRS leader and former MP B. Vinod Kumar said the role of traders is normally dominant in such cases. An investigation should reveal whether officials were also involved.
Another former minister of BRS S. Niranjan Reddy felt that the accused may have exploited flaws in the law. He said he did not expect them to indulge in it deliberately.