Film Director Vijay Gutte’s Father Embroiled in Alleged Rs 5,400 Crore Loan Scam

The Accidental Prime Minister, a film based on Sanjaya Baru's book on former Prime Minister Manmohan Singh's tenure, has run into several controversies after the launch of its trailer this week. But, there’s much to be sensed between the lines. In August this year, Vijay Gutte, who has directed the film, was arrested for alleged Goods and Services Tax (GST) fraud of over Rs 34 crore.

The director was booked under section 132 (1)(c) of the CGST Act, which pertains to 'wrongful availment' of input tax credit using bills and invoices that have been issued without any supply of goods or services.

Gutte’s firm, VRG Digital Corp Pvt Ltd, allegedly procured 149 fake invoices involving GST of Rs 34.37 crore for animation and manpower services received from another company, Horizon Outsource Solutions Pvt Ltd. In May, the Directorate General of Goods and Services Tax Intelligence (DGGSTI) had arrested the director of Horizon Outsource Solutions for an alleged GST fraud. The further probe into the case revealed that Gutte's firm was one of the top clients of Horizon Outsource and was shown as receiving services of about Rs 266 crore with a GST implication of Rs 34.37 crore, even as there was no actual supply of services. The DGGSTI claimed that Gutte's firm wrongfully claimed a cash refund of Rs 28 crore from the government against Central Value Added Tax (CENVAT) credit received for these fake invoices since July 2017.

Gutte not only availed non-existent input tax credit (ITC), but also fraudulently claimed refund of the ITC from the GST department on the basis of fake invoices and by doing so, Gutte and his firm defrauded and caused loss to the state exchequer. According to the rules, in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised, or the amount of refund wrongly taken exceeds Rs 5 crore, the accused is liable to be fined and imprisoned for up to five years. However, The Accidental Prime Minister director Vijay Gutte is out on bail.

In July this year, the Aurangabad Bench of Bombay High Court had directed the Economic Offence Wing (EOW) of the state police to probe an alleged fraud in Marathwada’s Parbhani district where loans worth ₹328 crore from five nationalised and one private bank were taken in the names of thousands of farmers by allegedly forging the documents, without the farmers’ knowledge. The accused in the case is Gutte’s father, Ratnakar Gutte, a prominent sugar baron of Parbhani, who had contested the 2014 Assembly elections as a BJP-alliance candidate but lost to the Nationalist Congress Party.

Ratnakar Gutte is the director of Gangakhed Sugar and Energy Private Limited, a sugar mill, where the loan was diverted. The loans were obtained in the names of sugarcane farmers who are members of the factory. The scam came to light after one of the petitioners approached UCO Bank in Gangakhed for a crop loan and it was found that some loan amount had already been obtained and was outstanding against him, allegedly borrowed from Andhra Bank, Dharmapeth Branch in Nagpur.

 After checking the CIBIL record, it was found that the crop loan amount had been disbursed through the said sugar factory. After conducting further investigation, the petitioners found that the loan amount had been disbursed in the name of dead persons through the sugar factory by a total of six banks, including five nationalised banks  -- Andhra Bank, UCO Bank, United Bank of India, Bank of India, Syndicate Bank and a private bank, Ratnakar Bank. A total loan amount of ₹328 crore had been disbursed in a similar manner.  This came to light after farmers themselves decided to investigate the matter with help from local MLA, Madhusudan Kendre.

The Leader of Opposition in Maharashtra Legislative Council, Dhananjay Munde, claimed that Ratnakar Gutte had allegedly secured loans worth over Rs 5,400 crore on the basis of fake documents made in the name of farmers. As per Munde’s claims, Gutte had formed 22 shell companies to route the money and in 2015, Gangakhed Sugar Factory procured bank loans in the names of more than 600 farmers under the ‘Harvest and Transport’ scheme. These farmers were getting bank notices for loans amounts, some of which are as high as Rs 25 lakh.

On being contacted, Ratnakar Gutte said the allegations were politically motivated and frivolous in nature. He would not comment on it since the matter was sub-judice. AnFIR was registered against Ratnakar Gutte on July 5 this year under various sections of the IPC, but no arrest had been made so far.

Vivashwan Singh is a student at Christ University and writes for several news websites, such as The Wire, DailyO, Quint among others