Binod Gupta, owner of Himalayan Cargo who is facing one of the largest cases of tax evasion at Kathmandu District Court, is also being investigated for money laundering, according to sources at the anti-money laundering agency. The Department of Money Laundering has initiated investigation into Gupta’s involvement in money laundering after the Department of Revenue Investigation (DRI) which had registered the case against Gupta, an Indian national on the charge of tax evasion, recommended for the same.

On August 17, 2018, the DRI had filed a case against Gupta and his wife Madhu Gupta, along with other 20 associates, on the charge of evading income tax and getting involved in transactions through fake Value Added Tax (VAT) bills.

The DRI had filed the case on the charge of evading income tax worth Rs544.2 million against the Gupta couple demanding that they pay Rs2.72 billion in total including fines and confiscation of the amount equivalent to evaded tax.  

This, according to the DRI, is one of the largest cases that the DRI has ever registered at the court. The Gupta couple and other 20 people have been charged doing transactions with fake VAT bills.

After filing the case of revenue evasion, the DRI had written to the Money Laundering Investigation Department to conduct a probe on the Gupta couple.

“After we found that Gupta had bought around 22 ropanis of land in the Kathmandu Valley along with cash deposit worth Rs150 million in banks, we recommended that the Money Laundering Investigation Department conduct a probe,” said Dirgharaj Mainali, director general at the DRI.

According to Money Laundering Investigation Department, this is the first ever case where tax evaders are facing investigation for money laundering.  The department conducts investigations into money laundering only to find whether anybody has used illegal earnings for any legal purposes to launder money.

“Initial investigation so far suggests there is a compelling case against Gupta,” said a senior official at the anti-money laundering agency.

Despite conducting transactions of hundreds millions of rupees in a year, Gupta’s firm had been paying income tax of just Rs5,000 a year since fiscal year 2008-09, according to the DRI.  His firm had not paid a single rupee as tax for the last three years. But, when the DRI explored his accounts, it found the transactions that were up to Rs1 billion.

After the DRI seized a truck carrying milk power for the firm owned by Gupta at Nagdhunga, Kathmandu, in June last year and initiated investigation, Gupta’s involvement of large scale tax evasion came to the light.

According to the DRI, the milk powder was imported from India through Nepalgunj customs without producing customs clearance documents at the customs office, possibly due to collusion with customs officials.

Just before the milk powder was imported, CCTV at the customs office was not working, which the DRI believes was due to collusion.

Gupta, his family members and relatives were involved in forming different companies and doing transactions through fake VAT bills to avoid paying taxes in Nepal, according to Mainali.