According to sources, results of the on-going investigations by the Income Tax department on Shaw Wallace & Co indicate a collusion between the state excise officials and the liquor major's Aurangabad-based subsidiary, Maharashtra Distilleries.
As per regulations, liquor permits should be cancelled after being issued to the client only once and any attempt to recycle them is punishable under the state excise laws.
The sources added that the authorities were in possession of incriminating documents. In 1994-95, Shaw Wallace & Co spent Rs 78.67 crore on excise duty on sales of Rs 168 crore.
Maharashtra Distilleries may also be found guilty of an inflated statement of expenses and for quoting lower production figures (to avoid excise), according to sources.
The statutory auditors of the company, Lovelock & Lewes, had noted certain irregularities in the company's accounts.
In its report to the shareholders in 1994-95, Lovelock & Lewes had noted that no provision had been made in accounts in respect of certain deposits, advances and sundry debtors. We have not been able to satisfy ourselves that these accounts will be recoverable in full, they said.
Shaw Wallace & Co itself had granted the company unsecured loans of Rs 27.52 crore as on March 31, 1995.
Meanwhile Manu Chhabria's residence in Mumbai, Samudra Mahal, has been sealed off as also another residential apartment Rambha.
Authorities have not yet ascertained as to whether, Manu Chhabria or Pradip Mathur, an executive director of the company, is the real owner of this apartment.
