Press note regarding arrest of a service provider for failing to remit Service Tax - Comm'te of Central Excise, Mangalore-III
August, 13th 2014
OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX
7th FLOOR, TRADE CENTRE, BUNTS HOSTEL ROAD, MANGALORE-3.
C.No. IV/06/90/2013-14 SIV Cell Dated: 11.08.2014
MANGALORE SERVICE TAX ARRESTS A KARWAR BASED SERVICE PROVIDER
FOR FAILING TO REMIT THE SERVICE TAX COLLECTED TO THE EXCHEQUER
Officers of the Commissionerate of Central Excise and Service Tax, Mangalore
arrested the Managing Director of a private limited company providing storage and
warehousing services at Karwar, for collecting the Service Tax of over Rs.60 lakhs from
August 2011 to March 2014 and not remitting the same to the Government account.
As on date, over Rs.51 Lakhs Service Tax collected is retained by them for more than
six months without remitting to the Exchequer. The service provider based in
another state having business at Karwar has been evading appearance before the
investigating officers for several months. He appeared for the investigation only after
a petition was filed before the Hon'ble Court for issuance of a non-bailable warrant to
secure his presence.
2. During the verification of the documents of the service provider, the officers
found that the service provider has failed to remit the Service Tax collected to the
Government account. The detailed investigation initiated in the matter prima facie
revealed that the service provider has been evading payment of appropriate Service
Tax for over three years. The investigation has unearthed that despite providing
taxable services since August, 2011, the service provider has failed to obtain the
Registration Certificate till February, 2013 i.e., the delay of about 16 months. It has
also been revealed that the service provider was not even complying with the basic
statutory requirements like filing of returns intimating the taxable services provided,
discharging appropriate Service Tax liability, remitting the Service Tax collected to the
Government account etc. thereby contravening the provisions of the Finance Act, 1994
and the Rules framed thereunder.
3. As per Section 89(1)(d) read with Section 89(1)(ii) of the Finance Act, 1994
whoever collects Service Tax in excess of Rs.50 lakhs but fails to credit the same to
the Government account within a period of 6 months from the day on which such
payment becomes due, is liable for imprisonment for a term which may extend to 7
years. Such offences shall be cognizable as per Section 90 of the Act.
4. The service provider was therefore, arrested today i.e. on August 11, 2014
under Section 91 of the Finance Act, 1994 and produced before the Hon'ble Principal
Civil Judge Senior Division and Chief Judicial Magistrate, Mangalore who remanded
him to judicial custody. Further investigation is under progress.
5. The Commissionerate has initiated several measures to facilitate genuine trade
to improve service tax compliance in the jurisdiction. Simultaneously, concerted
efforts are being taken to create a data base of habitually non-compliant trade on
the basis of inputs generated and received from other Departments so as to take
appropriate action as per the legal provisions.
(Dr. M. SUBRAMANYAM)