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Bangalore, Jaipur Service Tax arrest Directors of VCES defaulters for alleged tax evasion of Rs 16 Crore

By TIOL News Service

NEW DELHI, MARCH 29, 2014: THE fiscal is now rapidly coming to an end, and the pressure is mounting on the revenue field formations to meet the shortfall. In this backdrop who could be a predictable target? None but service tax evaders, including VCES defaulters. And acting on intelligence, the Bangalore Service Tax Commissionerate yesterday arrested two persons and Jaipur Service Tax also raided and arrested on VCES defaulter.

As per the Press Statement issued by the Bangalore Service Tax, the anti-evasion sleuths arrested two persons for non payment of Service Tax collected by them from their customers. The Managing Director of M/s. Axis Fortification Pvt Ltd., and Director of M/s. Spectrum Consultants India Pvt Ltd. were arrested and produced before the Special Court for Economic Offences, Bangalore and both were remanded to judicial custody.

M/s. Axis Fortification Pvt. Ltd. are engaged in providing security agency service to CIGFIL, Columbia Sportsware Company, Mederich Limited etc. and have failed to remit the service tax of Rs.3.47 Crores collected from 2009 till date. M/s. Spectrum Consultants India Pvt. Ltd. have been providing Manpower Recruitment or supply agency services to majors like TATA Teleservices, Alcatel Lucent, CISCO, The Lalit Grand etc. and have collected service tax from 2011 till date to the tune of Rs. 2.41 Crores but failed to deposit the same with the Govt. exchequer.

As per the Release, both the parties had applied for amnesty under the Service Tax Voluntary Compliance Encouragement Scheme 2013, but had failed to pay the first instalment of 50% of the total service tax dues by the prescribed date i.e. 31st December 2013. Both the parties continued to default in paying service tax for the subsequent period also.

The arrests were carried out on 27.03.2014 and produced before the Court of Economic Offences, Bangalore on the same day.. The Service Tax Commissionerate has made two arrests earlier for similar offences.

Section 91 of the Finance Act, 1994 read with Section 89 and 90 of the Finance Act, 1994 provides for arresting of a person who is involved in defaulting the Service Tax liability of more than Rs.50 lakhs collected but not paid beyond a period six months.

The Finance Ministry has given directives to the service tax authorities to take stringent action against the defaulters of service tax and so many arrests have been taking place across the country in recent times.

Meanwhile, the Jaipur Service Tax conducted a Search on 27.03.14 at the official and residential premises of M/s. Vision Freight Solutions India Limited.

M/s. Vision Freight Solutions India Limited had filed VCES declaration which was rejected by the designated authority on account of untrue declaration.

The records resumed during the search revealed that the assessee had allegedly collected Service Tax to the tune of Rs. 2.03 Crores but failed to deposit the same in the Government exchequer. These facts were allegedly admitted by the Director of the company. Accordingly, he was arrested under Sub-Section (1) of Section 91 of the Finance Act, 1994 on 28.03.2014.

Preliminary scrutiny of the documents have revealed that the company was evading Service tax by misclassifying the service. The total amount of Service Tax evasion is estimated to be more than Rs. 10 crores.


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