The Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI) found CA. Akshay Jain guilty of professional and other misconduct. The charges stemmed from his involvement in a scheme that used his personal details to register 14 firms and generate fake GST invoices. The committee determined that he facilitated the creation of fake GST sale invoices worth over ₹30 crore, which led to the fraudulent passing of fake Input Tax Credit (ITC) of approximately ₹7.51 crore. Jain received a commission of ₹28.5 lakh for these activities. During the hearing, he did not provide a specific stay order from the High Court that was relevant to the disciplinary proceedings and admitted to several facts, including using his mobile number for firm registrations and receiving the commission. The committee rejected his defenses, such as his claim of being coerced and his assertion that GST officers were responsible for verifying documents. As a result of his actions, which caused a significant loss to government revenue and brought disrepute to the profession, the committee ordered his name to be removed from the Register of Members for five years and imposed a fine of ₹5,00,000.
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Setup by an Act of Parliament)
DISCIPLINARY COMMITTEE (BENCH-III (2024-2025)]
[Constituted under Section 21B of the Chartered Accountants Act, 1949]
ORDER UNDER SECTION 21B(3) OF THE CHARTERED ACCOUNTANTS ACT, 1949 READ WITH RULE 19(1) OF THE CHARTERED ACCOUNTANTS (PROCEDURE OF INVESTIGATIONS OF PROFESSIONAL AND OTHER MISCONDUCT AND CONDUCT OF CASES) RULES, 2007
PR/G/40/2021/DD/77/2021/DC/1577/2022
In the matter of:
Deputy Director,
Directorate General of GST Intelligence (DGGI)
Versus
CA. Akshay Jain (M. No. 241125)
MEMBERS PRESENT:
CA. Charanjot Singh Nanda, Presiding Officer
Smt. Anita Kapur, Government Nominee
Dr. K. Rajeswara Rao, Government Nominee
CA. Sushil Kumar Goyal, Member
CA. Piyush S. Chhajed, Member
Date of Hearing: 18th July 2024
Date of Order: 24th October, 2024
1. That vide findings under Rule 18(17) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 dated 7th February 2023, the Disciplinary Committee was, inter-alia, of the opinion that CA. Akshay Jain (M. No. 241125) (hereinafter referred to as the “Respondent”) was GUILTY of Professional and/ or Other Misconduct falling within the meaning of Item (7) of Part I of the Second Schedule and Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949.
2. That charge against the Respondent was that he was grossly negligent in the conduct of his professional duties as he indulged himself in obtaining GST registration,of 14 firms by using his own mobile number, user ID and other password details; facilitated in issuing fake GST sale invoices of taxable value of Rs.30.76 crores to different firms located at different places within the States of Andhra Pradesh, Telangana and Karnataka without actual supply of goods/services; fraudulently generating fake Input Tax Credit which was passed on to the tune of Rs. 7.51 Crores during the period from 2018-19 to 2020-21 (till December, 2020) thereby defrauding government revenue and had received a commission of Rs.28.5 Lakhs for such fraudulent acts of generating fake invoices and passing on fake input tax credit. Another charge that the Respondent by his fraudulent acts brought disrepute to the profession.
3. That pursuant to the said findings, an action under Section 21B(3) of the Chartered Accountants Act, 1949 was contemplated against the Respondent and a communication was addressed to him thereby granting an opportunity of being heard in person/through video conferencing and to make representation before the Committee on 18th July 2024.
4. The Committee noted that on the date of the hearing held on 18th July 2024, the Respondent was not present. The Committee further noted that during the previous hearing held on 25th June 2024, the Respondent appeared before it and sought adjournment on the ground that Hon’ble High Court of Andhra Pradesh had granted interim stay against the extant disciplinary proceedings, The Committee in that meeting directed the Respondent to submit the copy of order of the Hon’ble High Court of Andhra Pradesh granting interim relief against the extant disciplinary proceedings, along with a copy of the petition filed by him before the Hon’ble Court, within the next 10 days. The Committee noted that the Respondent vide email dated 16th July 2024 submitted copy of order 20th June 2024 passed by Hon’ble High Court of Andhra Pradesh at Amaravati in Criminal Petition no. 2922 of 2023 in case titled “Shri Akshay Jain Vs. The State of Andhra Pradesh and Ors.”. However, he did not submit copy of petition. The Committee, on perusal of said order, noted that interim stay granted by Hon’ble Court was with respect to further proceedings in CC No. 0000008 of 2022 on the file of learned IV Additional District Judge and Special Judge for Economic Offence Court-cum-II Metropolitan Sessions Judge, Vishakapatnam. Accordingly, in absence of any specific interim stay against the present case and in absence of the Respondent, the Committee decided to proceed further. Accordingly, the Committee took on record the documents and representations made by the Respondent on the findings of the Committee. The Committee noted that the Respondent in his written representation dated 23″ February 2023 on the findings of the Committee inter-alia stated as under:
a) That statement of the Respondent recorded on 04.12.2020 before Additional Assistant Director of DGGI — VZU, relying on which the finding was arrived, was taken forcibly and under pressure.
b) That it was the duty of GST officers granting the license to verify the authenticity of the documents submitted for registration before granting the license.
c) That there is always an option to change the registered office, so the initial mobile number/ email id given did not have any special significance.
d) That the role of the Respondent was limited to filing of returns and preparation of invoices in some cases. He was not authorised signatory for any firm and was not holding any drawing rights in bank accounts of respective concerns.
e) That the proprietors and end beneficiaries are all trying to escape from their personal liability and trying to put the whole blame on the Respondent.
5. Keeping in view the facts and circumstances of the case, along with the material on record, the Committee noted that, as regards the plea of the Respondent that his statement was recorded forcibly and under pressure, the Respondent has not brought on record any retraction statement or any other proof to support his claim. As regards other plea that it was the duty of GST officers granting the license to verify the authenticity of documents before granting registration, it was noted that such a plea cannot sustain in the extant matter, as the Respondent, as a professional was expected to strictly adhere to the framework of GST system and not to find ways to bypass it. The Committee further viewed that other pleas raised by the Respondent were already dealt with in detail in its findings report.
6. The Committee noted that the Respondent had himself admitted before it at hearing stage that he had obtained GST Registration of various firms based on the clients credentials viz Aadhar Card, PAN, rental agreement which were provided to him at his office and he never visited client’s business place ever. He further admitted to have used his mobile number for registration of firms to ease the process and the proprietors of the said firms were not having any other business. He also submitted to have met his client at Badminton Court. It was also accepted by the Respondent that the invoices were being prepared at his office in his absence by his clients. The Committee further noted that out of the 13 firms, 11 firms were being controlled by Surya Prakash Reddy who used to send the data through what’sapp/e-mail or by hand to the Respondent.
7. The Respondent also admitted at hearing stage to have received the said Rs. 28.50 lac from his client account. Further when details were sought from him regarding his assistant/ employees at office, it was noted that the Respondent took contrary stand. On one hand he submitted that he had no assistant/employee at his office. However, while submitting with respect to quantum of commission received, he stated that he had paid Rs. 10 lakhs to his assistant out of total Rs. 28 lacs he received from his client.
Hence, in view of the documents/ information available on record as well as submissions of the Respondent, it was apparent that the Respondent was instrumental in the act of getting the firm registered, raising fake invoices, filing wrong GST returns and thereafter passing fake ITC credit to enable beneficiary companies to pay off their GST liabilities by availing fake ITC credit procured from the Respondent through intermediaries. The Respondent received commission of Rs.25.8 lacs as evident from the credit entries in his bank account from Mr. Virupakhi, an intermediary, for passing fake ITC credit.
It was viewed that the amount of ineligible ITC availed/passed on was running into Crores and that the Respondent had totally deviated from the righteous path and indulged in nefarious financial activities. His acts ultimately led to the contravention of the applicable provisions of the CGST Act and Rules made thereunder causing wrongful loss to Government exchequer. Such an act not only proves intentional gross negligence towards responsibilities expected from Respondent, but also a lead player in a tax fraud and such an act had also brought disrepute to the profession. This conduct of the Respondent constitutes Professional and/ or Other Misconduct within the meaning of Item (7) of Part I of the Second Schedule and Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949.
8. The professional misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s findings dated 7th February 2023 which is to be read in conjunction with the instant Order being passed in the case.
9. The Committee, hence, viewed that the ends of justice will be met if appropriate punishment commensurate with his professional misconduct is given to him.
10. Accordingly, the Committee, upon considering the nature of charge and the gravity of the matter ordered that the name of Akshay Jain (M. No. 241125) be removed from Register of Members for a period of 5 (five) years and a fine of Rs. 5,00,000/- (Rupees Five Lakh only) be imposed upon him, to be paid within 90 days of the receipt of the order and in case of failure in payment of fine as stipulated, the name of the Respondent be removed for a further period of 1 month from the Register of Members.
Sd/-
(CA. CHARANJOT SINGH NANDA)
PRESIDING OFFICER
Sd/-
(SMT. ANITA KAPUR)
GOVERNMENT NOMINEE
Sd/-
(DR. K. RAJESWARA RAO)
GOVERNMENT NOMINEE
Sd/-
(CA. SUSHIL KUMAR GOYAL)
MEMBER
Sd/-
(CA. PIYUSH S CHHAJED)
MEMBER
DATE:24th October, 2024
PLACE: New Delhi
