Independent Tipperary TD Michael Lowry and his refrigeration company Garuda Limited have gone on trial at Dublin Circuit Criminal Court on tax offences.

Mr Lowry has pleaded not guilty to making an incorrect tax return for the 2002 tax year.

He has also denied three counts of consenting to or conniving with his company to make incorrect returns or provide incorrect information.

The company also denies failing to keep proper books of accounts, caused by the wilful acts of Mr Lowry.

The charges relate to a sum of almost £250,000 sterling, or €372,000, the prosecution says was due to Garuda in August 2002 as commission from a Finnish refrigeration company, Norpe OY.

Instead, the prosecution says the money was diverted to a third party.

Prosecution counsel Remy Farrell said this appeared to be an individual called Kevin Phelan and a trust called the Glebe Trust on the Isle of Man.

He said this was done at the behest of Mr Lowry.

Mr Farrell said this money was not accounted for anywhere in Garuda's books in 2002 and was "airbrushed out of Garuda's accounts" for that year.

He said because the money was diverted at Mr Lowry's behest, Mr Lowry had the benefit and use of that money and should have declared it as income.

Instead, there was no mention of it in his tax return and it was kept off the books of the company.

The prosecution said incorrect tax returns were made knowingly by Mr Lowry and by his company with his consent or connivance.

Mr Farrell said in 2007 a "very strange" thing happened - the money was suddenly accounted for in Garuda's accounts for 2006.

He said this seemed to have been done on the basis of a "very terse" letter from Mr Lowry.

Mr Farrell said Mr Lowry had decided it needed to be accounted for "for whatever reason" and pretended the money had been earned in 2006, rather than 2002.

The jury was told this was an attempt to cook the books a second time. Mr Lowry was trying to push the 2002 toothpaste into the tube and it was an accounting version of Mexican "refried beans".

Mr Farrell also raised an issue that he said was likely to be one of the "more hotly contested aspects of the trial".

He told the jurors that the Revenue Commissioners had raised a tax assessment against Mr Lowry, on the basis that the €372,000 had been taken as an emolument - he explained this meant a wage or salary - money you might earn on a regular basis.

The jury was told that Mr Lowry appealed that assessment to the appeals commissioner and succeeded.

However, Mr Farrell said the appeal was successful on a very specific basis and the jury would have to look at the broader issue of whether the money amounted to income or profit or gain.

He said this applied to the charge against Mr Lowry only. He asked the jury to keep an open mind on that aspect of the case.

A former chief executive of Finnish refrigeration company, Norpe OY, told the court that Mr Lowry's company had introduced Norpe to Dunnes Stores and Garuda was paid commission on sales by Norpe to Irish companies.

Fred Ramberg gave evidence via videolink from a Finnish court. He said he could not remember why there were three commission agreements signed by him and Mr Lowry in November 1997, shortly before he himself resigned as Chief Executive of Norpe.

In one of these agreements, the name Michael Lowry was crossed out and "The Glebe Trust" with an Isle of Man address was written in.

Mr Ramberg said he did not have a clue what the Glebe Trust was and could not remember who gave him those details.

Under cross-examination by lawyers for Mr Lowry, Mr Ramberg said he could not be sure the three agreements came about because Mr Lowry had an ongoing issue with the Revenue Commissioners and it was unclear which entity would be trading with Norpe. But he said this was "likely".

Senior Counsel for Mr Lowry Michael O'Higgins said his client was on holidays in Spain in 2002 and Mr Phelan, with whom he had done business, was pressurising him for money Mr Lowry owed him.

He said his instructions were that Mr Lowry rang Mr Ramberg and asked him to pay the money due to the company directly to Mr Phelan.

Mr Ramberg said he did not remember this conversation or any reason like that. He said Norpe always required an invoice to make payments.

The trial will continue tomorrow.