Probe into tax, provident fund evasion by German firm
MW High Tech Projects India Private Limited has also allegedly evaded income tax, sales tax, and commercial tax.Updated: Dec 28, 2017, 23:19 IST
Regulatory authorities in India are probing the alleged violation of social security laws, misappropriation of provident fund (PF) contributions, and income tax evasion by MW High Tech Projects India Private Limited, a subsidiary of German engineering and construction company M+W Group GmbH.
To probe allegations of PF evasion pertaining to hundreds of employees of MW High Tech Projects India Private Limited, the Employees’ Provident Fund Organisation (EPFO), late last year, set up a four-member commission of inquiry in Hyderabad.
“Normally, we do not appoint any inquiry committee into the charges of PF violations by companies. But in this case, the magnitude of evasion is said to be very high — to the extent of ₹150 crore. Hence, we appointed a commission of inquiry, headed by an assistant commissioner and three enforcement officers, to probe into the company records. We shall complete the investigation at the earliest,” regional PF commissioner in Hyderabad Bhola Chandrasekhar told HT.
Asked about the total number of employees in the company, Chandrasekhar said his office would have the details of only those employees whose PF was deducted and remitted.
“For October 2017, records of which were submitted last month, the company had 963 employees. We have no information about the actual employee strength of the company which operates through different contractors in different parts; each contractor has a different PF code,” he said.
Top officials of the company, including global compliance officer Steffen Liebenoerfer, managing director Anil Chanana, chief financial officer Dilip Nemchand Gada, and India compliance head Vikas Pareek did not respond to emails seeking comment. Officials at the Hyderabad corporate office did not respond to text messages and calls made on the office landline and mobile phone.
The alleged violations came to light after whistleblower Abhishek Mishra, who joined the group in March 2016 as HR head, came across large scale financial misappropriation and reported this to regulatory authorities. He was separated from the company as soon as he intimated regulatory authorities about the irregularities. He challenged the action of the company in court, which through judgment on December 1 was ordered in his favour.
Mishra alleges that the quantum of PF evasion is far higher, upward of ₹400 crore. “The total deviation will be between ₹500 to ₹1,000 crore,” he told HT.
Besides PF, the company has also evaded income tax, sales tax, and commercial tax. The company has not filed its statement of accounts with the Registrar of Companies for years, Mishra said, adding the tax department has pinned the company’s tax ability at ₹110 crore for two years.
Lakhwat Suresh, deputy commissioner of Income Tax (Hyderabad), declined comment regarding the inquiry against MW High Tech Projects Limited.
“First, I am not authorised to speak on the issue. Secondly, the department never divulges information with regard to an ongoing inquiry into an alleged tax violation by private company. Thirdly, the complainant also requested that the probe remain confidential,” Suresh told HT.
Mishra alleged an inquiry is going on against the company by the mines and minerals department also for non-payment of royalties to the government.
While the M+W group’s official website earlier mentioned a list of its projects in India, the company has taken off all details related to its work here after regulatory authorities started probing violations. Mishra alleges the company is in the process of winding down its India operations.