MP Group chairman arrested for tax evasion

Pune: The Pune zonal investigation wing of the Directorate General of Goods and Services Tax Intelligence (DGGSTI) said it has arrested the chairman of Pune-based MP Enterprises and Associates (MPEAL), Madhukar Pathak, for alleged service tax evasion of Rs 6.94 crore. The department said that the facility-management provider had collected service tax from various sources but had not deposited it with the government.
“Vide order dated October 16, the Shivajinagar court sent Pathak to judicial custody till October 23,” DGGSTI said in a statement.It said investigations are in progress and the amount of service tax evasion by MPEAL is likely to go up substantially once the probe covers the company’s 140 clients.
“A slew of novel modus operandi was used by the accused to evade taxes,” said Vaishali Patange, deputy director, DGGSTI, Pune.
The company, through its legal representative Amol Dange, issued a statement alleging that the department has misused its powers and that the arrest was made in contravention of due process of law.
“The arrest is not as per the provision of law. No proper show cause was issued as required under different Acts,” the statement said.
The statement further said that Rs 1.5 crore of the Rs 6.94 crore has been paid while another Rs 3 crore was paid after the arrest, which reveals Pathak’s “co-operation”. “The adjudication proceedings have not been carried out nor show cause notice has been issued under section 73 of the finance Act, which is mandatory. This shows misuse of power by the department,” the statement added.