Thiruvananthapuram: The Special Investigation Team (SIT) probing irregularities linked to the proposed visit of the Argentina national football team and Lionel Messi to Kerala has flagged an alleged tax evasion of ₹25.78 crore by Reporter Broadcasting Company Private Limited (RBC).

The findings are part of a Detailed Inquiry Report submitted to the Commissioner of State Goods and Services Tax Department on September 7 by the SIT headed by ADGP P Vijayan. The report accessed by Onmanorama also flags what it calls financial irregularities involving loans, undisclosed bank accounts and inflated expenditure claims, and recommends a multi-agency probe into several aspects of the transactions.

According to the report, the SIT quantifies total tax evasion at ₹25,78,20,675. Of this, ₹22.68 crore relates to IGST allegedly not paid under the Reverse Charge Mechanism (RCM) on foreign remittances made to the Argentina Football Association (AFA). Reverse Charge means the liability to pay tax is on the recipient of the supply of goods or services instead of the supplier. The SIT said RBC had remitted $1.45 crore, equivalent to ₹126.04 crore, to the AFA through its collection agent Tour Prod Enter LLC.

The SIT also unearthed five additional foreign remittances (worth ₹1.90 crore) made to overseas legal counsel on which RCM IGST was not paid. It said RBC had not paid ₹34.15 lakh in RCM IGST on these transactions.

RBC also wrongly claimed another ₹2.75 crore relates to input tax credit (ITC). This included ITC on stadium renovation and works contract services, which the report said was barred under Section 17(5) of the CGST Act, as well as football club membership fees. The SIT also flagged non-payment to suppliers within 180 days in violation of Rule 37.

Six undisclosed bank accounts
The investigation also uncovered six bank accounts that RBC had allegedly not disclosed to the tax department. While the company had declared one SBI account, the SIT traced additional accounts with Axis Bank, ICICI Bank and Union Bank of India, including accounts maintained in INR, US dollars and AED. The seven accounts together recorded gross debit and credit transactions exceeding ₹1,098.56 crore, according to the report.

The SIT said total bank credits amounted to ₹549.22 crore. After deducting ₹212.75 crore received as NBFC funds, ₹336.47 crore remained. However, RBC had declared only ₹102.06 crore in its GST returns, leaving an unreconciled amount of ₹234.31 crore. The SIT has flagged this amount as suspected suppressed turnover.

The SIT has recommended referring different aspects of its findings to multiple agencies for further investigation. It has recommended that the Enforcement Directorate examine suspected money laundering and FEMA violations, while the Income Tax Investigation Wing has been asked to examine unexplained credits and undisclosed bank accounts. The SIT has also recommended referring the lending practices of Sree Gokulam Chit & Finance to the Registrars of Chits in Kerala and Tamil Nadu.

The Registrar of Companies has been asked to examine the failure to register loan charges under Section 77 of the Companies Act. The Inspector General of Registration has been recommended to investigate suspected stamp duty evasion and property undervaluation. The Directorate General of Goods and Services Tax Intelligence (DGGI) has also been recommended to coordinate multi-state search operations.

The SIT said its inquiry was not limited to the alleged non-payment of RCM tax on advance payments for services imported from the AFA. It examined other transactions and tax-related irregularities involving RBC and identified several issues requiring further investigation.

The SIT constituted by the Home Department, headed by Vijayan, ADGP (Law and Order), comprises S Sateesh Bino, Inspector General of Police, Internal Security; P Vikraman, Superintendent of Police, Crime Branch, Kozhikode and Wayanad; Shyju P L, Deputy Superintendent of Police, Crime Branch, Wayanad; and Mathew, Deputy Superintendent of Police, Crime Branch, Kozhikode Range. The Sports Department had flagged the alleged irregularities after the UDF government came to power. It subsequently forwarded a report to the Chief Minister and recommended a detailed probe by the Home Department.