Protest erupt after Arrest of two CAs from Gurugram in a tax fraud case

The arrest of two CAs in Gurugram for an alleged Rs.15 crore fraud has sparked a series of protests led by the Institute of Chartered Accountants of India (ICAI) against employees of the city’s CGST office.

Members of the ICAI claimed that the two CAs were being made scapegoats in the matter. They also requested that the CBI investigate the tax officers who were allegedly involved in the fraud.

The case is about alleged fraudulent corporations making input tax credit(ITC) claims. ITC refers to the tax that was previously paid at the time the good or service was acquired. The sum is deducted from the total amount owed and returned.

Sunil Mahalawat and Gaurav Dhir, two chartered accountants, have been charged of submitting audited account statements of fictitious firms through which ITC was claimed. These statements, or certifications, are required to claim input tax credits.

The CGST office summoned the two CAs for questioning on Wednesday. According to ICAI, they were harassed and detained at the workplace till Thursday. Police arrested them on Friday after receiving a complaint from CGST officials and brought them before a court. Protesters from the ICAI stated they, too, were mistreated and illegally held at the CGST office on Friday. Protesters included CAs’ family members who are members of ICAI.

According to Pradeep Yadav, an ICAI member, they also filed a police complaint against CGST officers for illegal restraint and urged that a FIR be registered against them. According to a senior police officer, it does not appear to be a case of improper restraint.

The two CAs were charged with cheating and fraud after a complaint was made at the city’s Sector 40 police station. They are currently being held by police.

“The CGST authorities who approved the input tax credit and the individual who collected the payment are no longer in office, but action has been taken against the CAs for providing the certifications,” Yadav explained.

However, a group of CAs has called for a protest at the CGST headquarters in Sector 32, describing the detention as “malicious.” According to a video shared by the CA group, the arrest is “illegal and malicious,” because no action is being taken against the person who received the refund or the officer who permitted the return without confirming paperwork.

When discussing the law, CA Umesh Sharma, vice-chairman of the ICAI’s GST Committee, stated, “Section 132 discusses the offences that are punished under GST law. And it goes on to add, “anyone commits, or causes to be committed, and retains the profits deriving from, any of the following offences.” In this instance, issuing a certificate does not result in undue enrichment for CAs.”

“A refund of this magnitude can only be granted by senior GST officials,” Pradeep Yadav, ICAI Member. “It has also been claimed that GST officers are being paid commissions to approve these fake tax claims. Normally, it takes months to approve a claim, but in this case, the refund was accepted within hours.” CGST authorities did not reply to queries for comment.