India has always remained as an emerging marketplace for franchise business. Franchising in India has witnessed a four-fold growth since 2013 and is estimated at USD 50.4 billion currently. Nowadays, more and more are starting to trust the ownership of Franchise and investing their hard-earned money with an expectation of getting a sustainable income for the months during the year. Covid has added fuel to this thought, because franchise ownership is an easy way to make money during these times. During COVID, most of the corporate professional tried their hands on opening an own business specially food and beverage industry.
SGF (Spice, Grill and Flame) is one among those franchisees, incorporated dated January 29th, 2019, with the main objective of providing food services and ancillary objective included the business activities related to this industry and having Liaison offices and services rendering. SGF’s Kewal Ahuja is one among those franchisee owners who has grown up well in this segment of business. He has become an owner of franchisee from few to many, from nowhere to everywhere. Paid PR and advertisement clean his image on media and social media.
The dream of the people who have joined hands with SGF in the franchising have now turned into a nightmare. Large sum was collected as franchise fee by SGF and this amount was not reported to regulators such as Income Tax Department and GST Council under regulatory filings. SGF is non-compliant in MCA filings as well. This report highlights the compliance irregularities and potential financial fraud. The facts discovered after a deep analysis of SGF and its sister concern company highlights that, both SGF and spice are registered at same address and Kewal Ahuja remains as key management in both the company. Both are related parties and spice is a sister concern of SGF. The sister concern - spice’s reported turnover for last 3 years are as follows:
Year – Turnover(INR)
2017-2018 – 1.26 crore
2018-2019 – 2.54 crore
2019-2020 – 2.70 crore
SGF in all these 3 years have reported NIL returns in GST and Income tax. However, the sister concern’s reported top line is mentioned above. This is a potential angle of fund misappropriation. SGF has a track record of statutory non-compliance. The details are as follows:
SGF was formed in year 2019 and first auditor was appointed on February 25th, 2019, however till march 2019, there was no available record with MCA for financial and annual filing.
Second auditor was appointed in SGF on 31/12/2020 for the period from 1st April 2019 till march 31st 2024. There is again no available record with MCA for financial and annual filing. The first auditor resigned in just few months and second auditor was appointed in extra ordinary general meeting, which raise an alarm.
SGF has not filed annual returns and financial statements with MCA for last 2 years which is a mandatory exercise for every PVT. Ltd company in India. If there is a further non-compliance for third year, MCA may start the process of striking off Suo moto. SGF has not initiated any e forms to correct the non-compliance which highlights the intent to not follow the going concern.
SGF has filed no income tax returns for the last three years. If the company is collecting franchise fee, the company should be filing the profit and loss account with the income tax department even if the net profit is NIL. This highlights malicious intent.
SGF has applied for 3 GST numbers. Out of these 3 GST numbers, 2 are registered in Delhi and Haryana state and the status is INACTIVE. These GST numbers are cancelled by GST council Suo moto. However, the GST number of Mumbai is active and there is no return filed by company since September 2021. If SGF has inactive GST registration, what was the objective of collecting GST from franchisee? This indicates a malicious intent.
Further, Kewal Ahuja is also the Treasurer of BJYM Delhi Pradesh and is focused on becoming a leading politician. Therefore, he also has his political influence to his advantage. All the people concerned and intending to invest in SGF should be cautious of this fraud, the better being refrained from investing in SGF owned by Kewal Ahuja.