CBDT alleges business, tax irregularities against Dolo-650 maker

New Delhi, July 13

The Central Bureau of Direct Taxes (CBDT) has accused the makers of the famous Dolo-650 medicine tablet of indulging in “unethical practices” and distributing freebies of about Rs 1,000 crore to doctors and medical professionals in exchange for promoting its products.

The CBDT, which functions under the Ministry of Finance, made claims following the raids conducted by the Income Tax sleuths on July 6 at 36 premises of Bengaluru-based Micro Labs Ltd. across nine states.

While the CBDT statement did not identify the group, sources confirmed it to be Micro Labs Ltd.

After the action against the drug-maker, the CBDT said in a statement that the department seized “unaccounted” cash of Rs 1.20 crore and gold and diamond jewellery of Rs 1.40 crore

“During the course of the search operations, substantial incriminating evidence, in the form of documents and digital data, has been found and seized,” it said, adding: “The initial gleaning of the evidence has revealed that the group has been debiting in its books of account unallowable expenses on account of the distribution of freebies to the medical professionals under the head ‘sales and promotion’.”

The CBDT alleged these “freebies included travel expenses, perquisites and gifts etc. To doctors and medical professionals for promoting the group’s products under the heads ‘promotion and propaganda’, ‘seminars and symposiums’, ‘medical advisories’ etc.”

“The evidence indicates that the group has adopted unethical practices to promote its products/brands. The quantum of such freebies detected is estimated to be around Rs 1,000 crore,” it further said.

Dolo-650, an analgesic (pain killer) and antipyretic (fever-reducing) oral tablet, was being extensively prescribed by doctors and medical shop owners for COVID-19 infected patients to reduce pain and fever.

The CBDT also alleged certain other irregularities on part of the group that has a presence in more than 50 countries and manufactures pharma products and active pharmaceutical ingredients (API).

The quantum of tax sought to be “evaded” through such means is estimated at over Rs 300 crore, the CBDT said in the statement. It added that the department also found instances of “violation” of provisions of tax deduction at source (TDS) under section 194C of the I-T Act in respect of transactions under contracts entered into with the third-party bulk drug manufacturers.