Shemaroo Entertainment CEO Hiren Gada, two others arrested over alleged tax fraud, get bail

Shemaroo Entertainment Ltd CEO Hiren Gada was arrested on Wednesday by the Central Goods and Service Tax (CGST) Department for allegedly committing tax fraud amounting to Rs 70.25 crore. Shemaroo Entertainment is a leading producer of movies and has produced several Bollywood movies. It also owns a video on demand application. 

Besides Gada, Joint managing director Atul Maru and Chief Financial Officer Amit Haria were also arrested. Gada was booked under relevant sections of the CGST Act. They were later released on bail.

GST officials said that  Gada and his associates created various shell firms to claim Input Tax Credit (ITC) amounting to crores of rupees, leading to heavy losses to the government exchequer. 

According to a Times of India report, the ITC was received on the basis of invoices without actual receipt of any goods/services. Jhaverchand Soni, partner of Shemaroo Entertainment, had told officials that he was only paid for signing some documents.

Soni said that he and his wife signed and Atul Maru used to manage everything and was operating his bank accounts. Maru, Gada and Haria admitted that they availed ITC without supply of any goods or services.

He was produced before a Mumbai court on Thursday where his lawyers said the GST officials "illegally" detained him for over twenty-four hours. 

The GST officials said Gada was questioned Wednesday and arrested the same day, then taken to court the next day. After hearing the arguments from both sides, the court released the Shemaroo CEO and did not send him to judicial custody.