The discovery of over Rs. 250 crores of unaccounted assets, including cash of almost Rs. 200 crores, 23 kg. of gold bars, 250 kg. of silver, 600 kg. of sandalwood oil worth Rs. 6 crores and papers of properties in Dubai, from an unknown, (now well known) Kanpur based gutka and perfume manufacturer, started innocuously, wholly unaware that it will lead to the biggest ever such seizure in India. It began with the Gujarat unit of the GST intelligence intercepting four trucks carrying gutka/tobacco at Ahmedabad. The trucks belonged to a Kanpur based transport company called Ganpati Road Carriers and they were carrying goods under 200 fake invoices of Shikhar Gutka, a Kanpur based gutka firm. The fake invoices clearly showed GST evasion and the firm readily accepted and paid GST of Rs. 3.09 cr. The preliminary enquiries by the GST intelligence unit, however led it to one of the partners of Shikhar Gutka, a firm called Odochem Industries, whose registered office was the residence of its partner, one Piyush Jain.
The evasion looked much bigger than what it was made to appear in the beginning and thus a coordinated search/raid was conducted by the investigation teams of the GST/IT departments, at 11 premises of Piyush Jain, consisting of his factory, office, cold storage, show room, residence and petrol pump, which soon led to the stunning discovery and seizure of massive amount of unaccounted assets, generated through tax evasion. In his initial statements, the low profile and secretive Piyush Jain claimed, that the huge cash etc. represented sales proceeds of 400 kg. of his ancestral gold. But with the massive incriminating evidence stacked up against him, he soon admitted that the undisclosed assets represented his gains from tax evasion, both IT and GST. It was built in over twenty years of such dubious operations. While the investigation continues and Piyush Jain has been sent to jail for 14 days, the GST department says that out of the amount seized, Rs. 52 crore is due to it by way of tax interest and penalty. With the DRI too investigating the case, since the gold bars found had foreign markings on them, it is too early in the day to quantify conclude the offences and liabilities of Piyush Jain under various laws.
The discovery of such undisclosed assets came as a huge surprise to the neighbours, relatives and business associates of Piyush Jain, since he generally moved around on an old Bajaj Priya scooter and his two cars included an old Maruti hatchback and an outdated Toyota Qualis. With this humongous wealth, he could have afforded a fleet of Rolls Royces and Bentleys. He was known to wear the most ordinary clothes and would wear rubber chappals even when he attended marriages and social functions. It was all a well rehearsed facade to stealthily hide his business and wealth. Piyush Jain happens to be a post graduate in chemistry from Kanpur University. He started his career as a salesman in Mumbai and soon got into the perfume business, with perfume compound for soaps and detergents and then into the lucrative pan masala/gutka business. The raid and its findings show that his business had expanded considerably, but it remained under the radar due to his stealthy/secretive mode of functioning. It is yet amazing and unbelievable that an ordinary perfume/gutka manufacturer could go unnoticed for so long, despite the extensive banking and revenue surveillance systems of the government, which capture almost every data of our banking and business transactions. The fact that the tobacco gutka business is inherently illegal also means that he operated in a business environment, where the end to end dealings are in cash, to avoid the law.
With the entire seizure/operations being based at Kanpur, which is in the poll bound UP, it led to a fierce political slugfest at the highest levels, with each party trading accusations. While speaking at the inauguration of the Kanpur Metro, PM Shri Narendra Modi linked the jailed perfume manufacturer and his mountain of cash to the Samajwadi Party, the main political opponent of the BJP in UP. He said that, ‘Boxes filled with notes have come out, I was thinking that they (SP) will say that this was also done by us. The people of Kanpur understand business and trade well. Before 2017, the perfume of corruption that they had sprinkled all over UP is there for everyone to see. But now they are sitting with their mouths shut. They are not coming forward to take credit for the mountain of cash notes seen by the entire country. This is their achievement and their reality’. The Home Minister Shri Amit Shah while addressing a public rally in UP took a political potshot and said that, ‘Recently a perfume businessman from SP was caught. Akhileshji is squirming, asking why we conducted raids. Rs. 250cr. was seized from his (Piyush Jain) house. Akhileshji where did this money come from’. Other BJP leaders alleged that Piyush Jain had launched his Samajwadi Attar brand of perfume, with the support and help of Akhilesh Yadav.
The Samajwadi Party supremo hitback saying that the BJP had mixed his party’s leader Pushparaj Jain with Piyush Jain and had raided its own businessman by mistake. SP leaders claim that the call records of Piyush Jain show that several BJP leaders were in touch with him. With the entire matter taking more of political overtones than a tax evasion case, street rumours are rife on both sides of the table, with some saying that the seized money is the BJP’s booty, while others say that it belongs to the Samajwadi Party.
It is very apparent from the findings that Piyush Jain operated in the eco system of black money, where his entire range of activities, beginning from purchases and ending with sales, were conducted in cash, with no disclosures made in the tax returns, whether GST or income tax. It is surprising how he managed to evade the government’s surveillance for so long, and one wonders whether he had a godfather in the system. It will obviously lead to his penalty and prosecution under several laws, including income tax, GST, Black Money Act, Benami Act, Customs and PMLA and the aggregate tax penalty etc., will far exceed the amount seized.
But since the politicians have jumped into this saga, giving it political undertones and accusations in a poll bound state, it raises an interesting question ie. the popular, perception is that it is the politician/political parties that sit on top of the corruption pyramid in India, with 000s of crores of bribes/pay offs being reportedly transacted. Election funding and post election horse trading itself are said to involve tons of black money. Then why is it that they are not caught red handed like Piyush Jain and others, and why is it that the biggest finding and seizure of black money in India is from an ordinary trader/businessman and not from the premises of a neta or a political party. Your guess will be as good as mine, but the reasons could be that :-
1. A neta from the ruling party gets protected by those in power.
2. Netas store their assets under benami deals and thus even if raided have little in their name to answer. Their funds are often parked with large business houses.
3. Netas avoid storing large sums at a single place.
4. Informants are not willing to be whistleblowers against netas out of fear, and so is the case with babus.
5. Their ill-gotten gains are popularly parked in real estate, where cash dealings are rife.
6. They manage launder their money while in power and give it a clean façade.
7. Since they are generally in the like light, they tend to be careful and are carefully guided by consultants.
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