A report by The Wire on Amit Shah's son Jay Amit Shah's company revenues and the profits it has incurred since BJP came to power has rocked the political domain. Amid divided opinions, the opposition Congress party is making it even more difficult for the BJP to survive its first blow. True or false, the Congress is now demanding a probe in the matter for clarification and is daring the government to take firm action against Jay. 

Meanwhile, BJP is calling the allegations fake and defamatory. In fact, Amit Shah's son said he would sue the author of the report and the editors and the owners of the website for criminal defamation.

Reacting to the case, Congress Vice-President Rahul Gandhi Tweeted, "We finally found the only beneficiary of Demonetisation. It’s not the RBI, the poor or the farmers. It’s the Shah-in-Shah of Demo. Jai Amit."

According to The Wire, the turnover of Temple Enterprise Private Limited, a company owned by Jay Shah, grew from Rs 50,000 in March 2015 to Rs 80.5 crore in 2015-16. In the same year, the company got access to an unsecured loan of Rs 15.78 crore from financial services firm KIFS.

In response to this, Jay Shah's lawyer wrote to The Wire, "Jay Shah, Jitendra Shah and their associates invested share capital and unsecured loans in this company [Temple Enterprise]. Since working capital facilities were not available to a new business/company, interest bearing Inter Corporate Deposits (ICD) were taken from time to time from KIFS Financial Services Ltd., a registered NBFC, to run this business. Tax has been deducted on the interest paid (TDS) regularly and the principal and interest amount has been repaid in full.”

Amid controversies pertaining to the sharp turnover, the lawyer further said that since the company was dealing with the import and export of agricultural goods rapeseed DOC, castor DOC meal, desi chana, soyabean, coriander seeds, rice, wheat, maize, a turnover of Rs 80 crore is not abnormally high.

The report also speaks about another of Shah's companies Kusum Finserve, a limited liability partnership, incorporated in July 2015. The report suggests that the company received inter-corporate deposits from KIFS Financial worth Rs 2.6 crore in FY 2014-2015 and an unsecured loan of Rs 4.9 crore.

To this, the lawyer said, "This entity has also been regularly raising ICDs/loans from KIFS Financial Services for the last several years and the amount of Rs. 4.9 crore was the outstanding closing balance from them. These amounts were used for regular working capital. Tax has been deducted on the interest paid (TDS) and principal and interest amount has been repaid in full.”

Finserve's loans from Kalupur Commercial Cooperative Bank has also come under the scanner. The opposition pointed how the company received a loan of Rs 25 crore against collaterals valued at just Rs 7 crore. To this, Shah's lawyer said, "the bank did not give the firm a loan but a non fund based working capital facility in the form of a Letter of Credit up to Rs 25 crore. This facility is availed from time to time”.

The report also speaks about LLP availing a Rs 10.35 crore loan from a public sector enterprise , Indian Renewable Energy Development Agency (IREDA). To this, the lawyer justified, "The loan taken from IREDA for setting up a 2.1 MW wind energy plant is based on the equipment prices prevailing at that point of time as per industry standards (approx Rs 14.3 crore) and duly appraised and sanctioned in the normal course of business. The outstanding loan as on 30-06-2017 is Rs 8.52 crore and interest and repayment of loan are regular."

Some sources suggest that the report was indeed false and defamatory as the company had actually reported a decline from a positive Rs 19 lakh in 2014-15 to a negative Rs 80.2 lakh in 2015-16. In fact, the Rs 80.2 lakh stated in the balance sheet was in parenthesis, which means negative.

Meanwhile, speaking to the media, Jay Amit Shah said, "My businesses are fully legitimate and conducted in a lawful manner on commercial lines, which is reflected in my tax records, and through banking transactions. I had taken loan either from NBFC or Non-Funded Credit Facilities from Cooperative Bank on purely commercial terms strictly in accordance with law."

He further said, "I have repaid the loans by cheque on commercial rate of interest and within the time stipulated. I have mortgaged my family property with the cooperative bank to get the credit facilities."

Meanwhile, backing Jay was Railway Minister Piyush Goyal who said that the report was “absolutely false, baseless, malicious, derogatory, defamatory and hollow”. Goyal is also reported to have said, "It’s all in his account books, and his income-tax returns and all transactions are through that."

"I don’t think there is any bar in this country on taking a loan from the bank or NBFC and all the loans have been taken strictly in accordance with law on commercial rates of interest and commercial considerations. Securities have been provided and the loans taken from the NBFC have been fully paid along with interest after deducting tax at source," he said.

Goyal further said that agri commodities is a high-volume, high-value, but low-profit margin business. He said, "So you do just a few transactions and the volume becomes very high. And in any new business, when you start a new business… bound to have an increase in turnover."

Goyal further informed the media that Shah's business incurred a loss and the business had to be closed down by October 2016. Incidentally, Goyal's defence came after senior Congress minister Kapil Sibal's press conference on the allegations against Jay Shah. After Goyal's response, Kapil Sibal called a second press conference and asked why a union minister was defending a private individual.

Further responding to Goyal's justification, Sibal said that Temple Enterprise Private Ltd, which was incorporated in 2004, showed that in March 2013 and in March 2014, the company recorded losses of Rs 6,230 and Rs 1,724 respectively. He said, "But in 2014-15 it started making profits… that means there was some change in May… The real change which is shocking came in 2015-16… when the company recorded a turnover of Rs 80 crore… The company also started getting loans."

He further added, "But the company stopped business activities in October 2016. And the reason stated was that the company was incurring losses. The losses were said to be 1.4 crore. So first it was incurring losses, then the turnover became Rs 80 crore and then again it started incurring losses and company stopped business… This is indeed strange."

Waging a direct attack against the Narendra Modi, Sibal then asked whether the government would order a probe because in the case of the opposition, the ED immediately sends notice and shows speed in arresting them.