 "Over-valuing power imports easiest source of black money, says SIT")
The Supreme Court-appointed Special Investigation Team (SIT) on black money, headed by former judge MB Shah, which filed a preliminary action taken report to the top court on Wednesday (20 August), has reportedly indicated that over-invoicing of power equipment imports has been a huge source of black money.
Howover invoicing works: Over invoicing is the act off stating the price of a good on an invoice as being more than the price actually paid. Crooked corporates usually use this method to illegally accumulate the excess payment in accounts abroad even while they obtain bank financing for the full value of the bloated invoice. Power has been a favoured sector for import duty cuts, and the possibility that promoters used the cuts to indulge in overincoicing is high.
Earlier this week, CBI Director Ranjit Sinha sought details of all cases being investigated by the Directorate of Revenue Intelligence in which companies have allegedly overinvoiced imports, leading to possible losses for the banks involved in lending to them.
In July, the CBI registered a Preliminary Enquiry (PE) against unnamed officials of the Adani Group and public sector banks, estimating the extent of overinvoicing at Rs 650 crore. The Adani Group allegedly siphoned off loans taken from public sector banks while importing equipment from South Korea and China. According to the CBI, the Adani Group has availed itself of credit facilities from State Bank of India, Punjab National Bank, Vijaya Bank, Oriental Bank of Commerce, Canara Bank and State Bank of Maharashtra.
In May, the DRI issued a show cause notice to Adani Group companies alleging that the total declared value of the goods imported under power and infrastructure heads, which attracts zero or less than 5 per cent duty, was inflated to the extent of Rs 9,048.8 crore.
The modus operandi allegedly followed was that the goods from various vendors (South Korea and China) weresent directly to India while the documents wererouted through an intermediary created by the Adani Groupat Dubai, which raised inflated invoices on the Indian company, against which money was remitted to Dubai.
A Business Standard report suggests thatthe CBI request is linked to the PE against the Adani Group.
In 2012,theDRI had claimed to have busted a Rs 1,000 crore hawala racket in Punjab involving certain international syndicates and Delhi-based businessmen.
The officials claimed they had exposed the racket while probing a scam by an exporter whoused inflated bills to misuse a duty drawback scheme run by the Finance Ministry and gained incentives worth Rs 60 crore.
According to a report in The Times of India, SIT has suggested that all big imports should be scrutinised for over-invoicing and that the slab of imports be fixed at Rs 10,000 crore, Rs 9,000 crore and downwards. Moreover, these cases should be assessed for possible over-invoicing under the direct supervision of designated officers known for their competence and integrity.
Meanwhile, the apex court has declined to share the SIT report, saying it was confidential.
“We can only say some progress has been made”, Justice HL Dattu said as the court asked SIT to proceed with the task before them and said the next hearing on the matter would be on 11 November 2014.
The court also allowed petitioner Ram Jethmalani and his counsel Anil Divan to interact with members of the SIT on the manner and means of getting black money from banks located abroad.
“They can suggest means and method (of getting the money stashed offshore) and nothing beyond it,” the court ordered on a plea by Jethmalani as he sought the court’s nod to interact with SIT members. Initially, the court said petitioner Jethmalani and his counsel needed no permission of the court to interact with SIT members.
The court also asked Additional Solicitor General Neeraj Kishan Kaul to tell the court about the steps taken by the government on the letter written by Jethmalani to some authority in Germany and the response to it.
Jethmalani, in his 29 March 2014 communication to German minister Wolfgang Schaube urged him to ask the German government to declare that it had no objection to the Indian government making public the names of Indian account holders in the banks of Liechtenstein whose names were given to India by it.
The court directed the Centre to give Jethmalani details of the account holders that were submitted to the court on 1 May 2014. The court’s order came as senior counsel Divan told the court that the government had given it the names of 18 people against whom prosecution has been launched but held back the names of eight people.
Divan told the court that two sets of names were submitted to the court in two separate envelopes but the government gave them one set of names and not the other.
The apex court, by its 4 July 2011 order, had called for a SIT to undertake investigations into unaccounted money stashed outside the country in tax havens and foreign banks and take steps to bring it back.
With inputs from IANS
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