How a pan masala shipment led to mega seizure, political row
KANPUR: One morning in early December, tax inspectors stopped a truck carrying a consignment of pan masala outside Ahmedabad. While checking papers, they found several questionable invoices with the driver, who couldn’t prove their authenticity. Suspicious, officials from the directorate general of GST (DGGI), a law enforcement agency under the Union finance ministry fighting tax evasion, started looking into the owner of the truck – Praveen Jain, who ran Ganapati Transport.
On December 21, the investigators landed in Kanpur to raid the offices of the pan masala company, Shikhar, and Praveen Jain. During the raid, the DGGI team intercepted four more trucks – all owned by Ganpati Transport, all loaded with the same pan masala brand, and all with the same fake invoices, issued to fictitious firms. In all, 200 such fake invoices were found, said tax officials on condition of anonymity.
Officials then tallied the stock available in the factory with the stock recorded in the books, and found a massive mismatch. “This corroborated the suspicion that there was clandestine removal of goods with the transporter,” said the official quoted above.
With suspicions now turning towards the supplier of raw materials, investigators started looking at Piyush Jain, a relative of Praveen Jain who supplied a key raw material – the chemical compound that gives a distinct scent to each brand of pan masala – and showed up at his house the next day. “We were just following the investigation. We hadn’t even thought we would recover any cash,” said a second official, requesting anonymity.
They were in for a surprise. Over the next two days, they recovered ₹196.45 crores in cash – all allegedly unaccounted-for wealth. “Everyone was surprised with the quantity we had before us; we got in touch with the SBI (State Bank of India) officials through our local office to help with manpower and machines,” said the second official quoted above.
Pictures of officials sifting through mounds of cash on the floor and notes piled up high have gone viral since, making Piyush Jain one of India’s mostnotorious businessman who allegedly evaded taxes worth several crores. The haul of cash is one of the largest by an enforcement agency, the Union finance ministry has said, and details about how the money was recovered from underground bunkers, walls and furniture has riveted local residents.
Piyush Jain is in jail but has sparked a bitter verbal war between the Samajwadi Party (SP) and the Bharatiya Janata Party (BJP) – because his name matches an SP lawmaker, Pushpraj Jain, who launched a Samajwadi perfume and who is his neighbour in Kannauj.
The SP alleges that the government was targeting Pushpraj Jain and erroneously raided Piyush Jain. Investigators say that the raid was the result of investigation and recovery of fake invoices. At an event on Tuesday, Prime Minister Narendra Modi even referred to “fragrance of corruption” while taking a dig at the SP.
Talking to law enforcement and tax officials, Piyush Jain’s neighbours and other residents in Kannauj and Kanpur, HT pieces together the high-profile incident.
Unassuming family
In Kannauj’s cramped Sarai Meera neighbourhood, everyone remembers the Jains as an unassuming family. In this area – located next to the railway station in the old town of Kannauj where cheek-by-jowl houses line narrow lanes – Piyush Jain grew up in a three-room house.
In a town famous for its scents, their father Mahesh Chandra Jain was a chemist who was an expert at mixing chemicals for different compounds. He passed on his trade secrets to his two sons, who launched a company, Odochem, in 2010.
Their fortunes rapidly changed, remember friends and neighbours. Over the next decade, they bought two adjoining houses, hired masons from Rajasthan and rebuilt the area with a 2,500 yard housing complex. His fragrance compound sold for up to ₹2 lakh per kg.
“Piyush Jain is one of the finest compound makers but he was not social and kept to himself,” said Nishank Jain,a friend. Another neighbour said he was never seen without his rickety Bajaj Super scooter or his rubber slippers. In Kannauj, he owned an old Santro and in Kanpur, the family had two cars.
This was why shockwaves went through the neighbourhood when investigators landed in Kannauj on December 24. The house was found locked and when the family was called, they said the keys were missing, said officials. In all, there were eight front doors and each had four locks; the DGGI team brought in gas cutters to finally get in.
“Inside, we found cash hidden in the bed, basement and the walls. The house was freshly built by the masons from Rajasthan with certain walls wider than the normal ones, which made us suspicious,” said the first official quoted above.
In all, ₹19 crore was recovered from the house with 23kg of gold, and 600kg of sandalwood, said Zakir Hussain, additional director of DGGI.
Start contrast
Piyush Jain’s home in Kanpur is in stark contrast to his ancestral house in Kannauj,. Located inside the high-income neighbourhood of Anandpuri, the swanky house stands on one of the most expensive pieces of real estate in the city, Uttar Pradesh’s largest.
But inside, officials said they found money in Rs 500 and Rs 200 notes stashed in wardrobes, neatly packed. Thirty currency bundles were wrapped in paper and plastic, and secured with coloured tape, said officials.
The ₹177.45 crore found hidden in the house was counted by 14 machines for 36 hours. The notes were finally taken away in 81 tin boxes to the SBI’S main branch in Kanpur. “On December 22, around 3.30pm, two vehicles screeched to a halt outside the house, and people stormed in, taking everyone by surprise. That’s how the raid began,” said Jung Bahadur, the guard.
The case has now taken a political colour, after Prime Minister Narendra Modi and SP chief Akhilesh Yadav sparred over the raid on Tuesday.
At an event in Kanpur, PM Modi took a veiled dig at SP and said that the “itar” (fragrance) of corruption that was spread before 2017 – the year the SP was voted out of power -- had now been exposed.
“They take credit for every development works done in the state. I was thinking if they will also take credit of the suitcases full of cash which are recovered in the last few days,” Modi said. Hours later, Yadav hit back. “By mistake, the BJP got its own businessman raided. Instead of SP leader Pushpraj Jain, it got Piyush Jain raided,” Yadav told reporters.
The other Jain at the heart of this row –SP MLC Pushpraj ‘Pampi’ Jain –denies any relations with Kanpur-based businessman. The confusion began, he claims, because the two men are neighbours in Kannauj and their houses are roughly 20 paces from each other.
“I am a Jain, he is a Jain. Coincidentally, we have houses in the same locality (Chipatta) in Kannauj. This doesn’t mean we are related. I have no relations with him whatsoever,” he said. Last month, Pushpraj Jain had launched the Samajwadi perfume.
Bail application
Piyush Jain is now behind bars, after the court of the metropolitan magistrate (corporation), Kanpur, remanded him in 14 days judicial custody after rejecting the investigators’ plea for his remand. He has been arrested on charges of tax evasion under section 69 of the Central GST Act and has allegedly confessed to his crime, said officials.
His lawyer, Subodh Malviya, said he will file a bail application on January 1. “DGGI has alleged that they have found this much amount from residential premises, it has not made clear whose money this is and where it has come from,” he said.
“DGGI has assessed that my client has the liability to pay penalty of 32.50 crore and that could increase. We have informed the DGGI through a letter that it should deduct ₹52 crore from money recovered and that has been put in a fixed deposit as penalty and other expenses. We have not heard from the DGGI or Central GST on our offer.”