Allegations of tax irregularities against Dolo-650 maker

The CBDT on Wednesday accused the makers of the widely-known Dolo-650 medicine tablet of indulging in “unethical practices”.

They have also been accused of distributing freebies worth Rs 1,000 crore to doctors and medical professionals in exchange for promoting products made by the pharmaceutical group.

The claims came after the Income Tax department had on July 6 raided 36 premises of Bengaluru-based Micro Labs Ltd across nine states.

After the action against the drugmaker, the Central Board of Direct Taxes (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.

The CBDT is the administrative body for the I-T department.

An email sent to Micro Labs Ltd seeking its response on the claims made by the department remained unanswered.

“During the course of the search operations, substantial incriminating evidence, in the form of documents and digital data, has been found and seized.

“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 medical professionals under the head ‘sales and promotion’,” it said.

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’, ‘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 said.

While the CBDT statement did not identify the group, sources confirmed it to be Micro Labs Ltd. Dolo-650, an analgesic (pain killer) and antipyretic (fever-reducing) oral tablet, was being extensively prescribed by doctors and medical shop owners to coronavirus patients to reduce pain and fever.

The company website showcased a news article, published in February, that said: “The company has sold 350 crore tablets (of Dolo-650) since the Covid-19 outbreak in 2020, and earned revenues of Rs 400 crore in a year.”

The CBDT also alleged other irregularities on part of the group. The group claimed that “artificially inflated deduction under special provisions in respect of certain incomes, by resorting to suppression of expenses and over-appropriation of revenue to the unit is eligible for such deduction.” The quantum of tax sought to be “evaded” through such means is estimated at Rs 300 crore. Deccan Herald