In what appears to be a tax fraud case by VRG Digital Corporation Pvt Ltd, a company linked to Vijay Ratnakar Gutte, who directed The Accidental Prime Minister, the firm has been found to be indulging in ‘circuitous transactions’ with a few firms to ‘defraud’ the British Film Institute, reported The Indian Express.
The company, already facing charges of violating India’s tax laws, has also claimed tax rebates in the United Kingdom, the report stated.
WHAT ARE THE ALLEGATIONS AGAINST VRG?
Amounting to serious fraud, the company has taken circuitous transactions to show a higher quantum of money invested in Bombay Casting Talent Management Pvt Ltd (BCTMPL), a Bohra Bros Group firm, a report by The Indian Express revealed. This came to light in a remand application filed by the Directorate General of Goods and Services Tax Intelligence (DGGSTI) in a local court. The Bohra Bros, the firm in question for receiving money, is also one of the producers of The Accidental Prime Minister.
According to the report, the transactions were undertaken to ‘defraud’ the British Film Institute to access tax rebate.
The firm is also accused of wrongly claiming a cash refund of Rs 28 crore from the Indian government against CENVAT (Central Value Added Tax) credit received for fake invoices since July 2017.
HOW GUTTE ‘DEFRAUDED’ BRITISH FILM INSTITUTE
Akin to Central Board of Film Certification in India, the British Film Institute is the principal agency for certification of a film as British.
However, Gutte’s firm has attempted to benefit from UK Creative Industry Tax Reliefs which allows up to 25 percent tax concession for films qualifying as British films.
The parameter for qualifying as British film requires production companies to be within the UK corporation tax net. Moreover, the production companies should spend be at least 10 per cent of the expenditure in making the film in the UK.
The tax relief, then, is available on the actual expenditure incurred in the UK or 80 percent of total filmmaking expenses, whichever is lower.
CASES AGAINST VRG IN INDIA
Back home, VRG Digital Corporation is accused of making “fake invoices” involving Goods and Services Tax (GST) of Rs 34 crore for animation and manpower services received from Horizon Outsource Solutions Pvt Ltd, a company that is also under the scanner of the DGGSTI for a GST fraud of over Rs 170 crore.
Talking to The Indian Express, Gutte said that there is no case against his contentious firm VRG Digital. He has also denied making any circuitous transactions to The Indian Express.
"“The government department misunderstood the situation and thought I was part of a racket run by Horizon Outsource Solutions involving a fraud of Rs 170 crore. In fact, I was a victim of the scam run by Horizon. I had paid Rs 34 crore to Horizon and, instead of paying the government, Horizon ran away with the money. I have filed a Rs 100 crore suit against Horizon Outsource. But I am glad the department arrested me because I believe that is how investigations in this country should be done.”" - Vijay Ratnakar Gutte, Director, The Accidental Prime Minister
CONTROVERSIES SURROUNDING THE ACCIDENTAL PRIME MINISTER
A plea was moved before the Delhi High Court against the movie The Accidental Prime Minister on Saturday, 5 January, demanding a ban on the trailer. The plea states that facts have been twisted to malign the image of the former PM Manmohan Singh.
The petition also states that the trailer of The Accidental Prime Minister is spoiling relations with foreign countries and affects the sovereignty and integrity of India.
The court on Monday disposed of a plea seeking a ban on the trailer of the movie The Accidental Prime Minister, saying it should be refiled as a public suit.
The trailer of The Accidental Prime Minister, within minutes of its release, had evoked a slew of reactions as it is claimed that the subject matter of the film – a behind-the-scenes look at the UPA administration, especially the dynamics between former Prime Minister Manmohan Singh and UPA Chairperson Sonia Gandhi.
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