GST Fraud suspected in BharatPe as the company audit reveals engagement of non-existent vendors

According to officials aware of the development, the Directorate General of Goods and Services Tax Intelligence has expanded its inquiry into BharatPe after an earlier investigation discovered the merchant-focused fintech startup had submitted bills to non-existent vendors.

BharatPe admitted to issuing invoices to non-existent vendors in October and paid the tax authorities Rs 11 crore in dues and penalties.

The fintech firm’s contacts with fictitious or non-existent vendors were revealed in an audit done by professional services firm Alvarez and Marsal. This was based on DGGI’s discovery that the corporation was making purchases from non-existent vendors or those who did not have a physical presence at the major place of business.

BharatPe Fires Madhuri Jain, Wife of Shark Tank’s Ashneer Grover on Financial Fraud Charges

The fintech firm admitted that some of its vendors did not exist through its agent, Deepak Gupta, brother-in-law of Madhuri Jain, wife of BharatPe co-founder Ashneer Grover and previous head of controls at the company.

BharatPe received employment and other services from these fictitious or non-existent vendors. DGGI has been looking for information on such merchants as well as those whose invoices have been falsified, according to another official.

Furthermore, the audit conducted by Alvarez and Marsal suggested to BharatPe’s board that the matter be investigated further to determine why the company was engaging with such vendors. This has reportedly tipped off the DGGI, as well as the investigative branch of the Central Board of Indirect Taxes and Customs (CBIC), which is looking into the company’s operations further.

According to a BharatPe representative, the company is cooperating with tax authorities and supplying all information requested.

Grover got into a legal tussle with Kotak Wealth Management over not being able to secure financing to bid for Nykaa’s initial public offering (IPO). BharatPe has been at the centre of a governance lapse fiasco that came to light after Grover got into a legal tussle with Kotak Wealth Management over not being able to secure financing to bid for Nykaa’s IPO.

Grover took a voluntary leave of absence shortly after, and the fintech firm experienced boardroom turmoil as a result of a series of events.

In the ongoing audit of BharatPe, Madhuri Jain was mentioned for allegedly inflating bills and sending invoices to non-existent vendors. BharatPe fired her on Wednesday, accusing her of fraud and theft. Following the move, Jain shared video clips of BharatPe employees reportedly drinking alcohol on company property and referred to the business’s board of directors as “chauvinistic.”