Tamil Nadu Health Department official Shivakumar had challenged the CBI intervention.

Gutkha scam Supreme Court upholds Madras HC verdict to transfer case to CBI
news Scam Friday, May 18, 2018 - 11:15

Over a year after Income Tax officials raided the offices of Tamil Nadu Health Minister C Vijayabaskar, the Supreme Court on Friday upheld the Madras High Court verdict on the Gutkha case that ordered a CBI probe into the scam.

The Supreme Court dismissed the plea of Tamil Nadu Health Department official Shivakumar who had challenged the order.

On April 26, the Madras High Court ordered a CBI probe in the Gutkha scam that names top police officials, such as the DGP and former commissioner of police and members of the food safety department, as accused.

The high profile scam shot Tamil Nadu Health Minister Vijayabaskar into national limelight when Income Tax officials raided his residences across the state in April 2017. It resulted in the cancellation of the RK Nagar bye-elections. Back then, members of the AIADMK had alleged that IT sleuths descended upon his residence at the behest of the Centre, which was then backing former Chief Minister O Panneerselvam’s faction.

How the scam was unearthed

On July 8, 2016, raids were conducted at the godown, offices and residences of a pan masala and gutkha manufacturer in Tamil Nadu who was facing charges of evading tax to the tune of Rs 250 crore. The manufacture, storage and sale of the carcinogenic chewable forms of tobacco, including gutkha and pan masala, was banned by the state government in 2013. Seized during the raid was a diary containing names of those who were believed to have been paid off by the gutkha manufacturers – and one among them was allegedly the state’s health minister.

Later, documents accessed by The Hindu and Times Now showed that an amount of Rs 40 crore was allegedly paid to the Minister and several officials as quid pro quo for facilitating the sale of banned gutkha in Chennai. The letter written by the Principal Director of Income Tax to the Chief Secretary and Director General of Police reportedly sought further investigation into the matter. The communication was made in May 2016 but there was allegedly no action taken in the matter.

Top cops and bureaucrats were named in connection with the scam. This included the state’s Director General of Police TK Rajendran, former Chennai Police Commissioner S George, several officials in the department of Health and Food Safety, and local councillors among others. The main allegation was the payoffs received by these individuals from gutkha baron Madhava Rao.

In a stunning disclosure to the Madras High Court in January this year, the Income Tax department said that its report to the former Director General of Police Ashok Kumar on the gutkha scam was found during the raids conducted at Veda Nilayam in November last year.

The letter reportedly detailed corruption involving the Health Minister, top police officers and others in the scam. According to the submission, the letter was found in former CM Jayalalithaa’s Poes Garden residence, specifically in her aide VK Sasikala’s rooms, leading to questions on how a confidential letter was in her possession.

Despite the ban of gutkha, the business has been thriving in Tamil Nadu. According to reports, around 30,000 traders sell these products in Chennai district alone. There are only 25 officers to monitor them and this includes officials who are allegedly paid a monthly bribe of Rs 35 lakh by each company. Around 119 tonnes of these products have reportedly been seized since 2013 in Chennai, but the quantity circulating in the market is predicted to be ten times that amount.

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