Excise authorities have booked a Rs 37-crore recovery case against Sahara India Financial Corporation Ltd (SIFC) for alleged service tax evasion against incentive payments made to a Group company.

According to a Central Board for Excise and Customs (CBEC) spokesperson, SIFC had paid around Rs 400 crore to Sahara India, Lucknow, between May 31, 2005 and August 1, this year. These were made as incentive for collecting deposits from the public.

"Such incentives are covered under business auxiliary services and hence assessable to service tax at 12 per cent. The duty liability involved comes to Rs 37 crore," she said, while denying that the case was booked as a follow-up of the income tax raids made earlier on the Sahara Group company offices.

The spokesperson further clarified that the case was booked on the basis of preliminary investigations and no show cause notice had been served on SIFC yet. There can be a gap of up to a year between booking a case and serving a notice.

Other cases

Similar preliminary investigation by the Pune zonal unit of the Directorate-General of Central Excise Intelligence had led to detection of customs duty evasion of Rs 25 crore by Skoda Auto India Private Ltd, Aurangabad. The company, in this case, did not include `technology transfer agreement charges' in the assessable value of goods imported by it. "They have already paid Rs 7 crore of the evasion sum voluntarily," the spokesperson informed.

Another case involved the Korean consumer durables giant, LG Electronics India. Based on information that the company was not paying duty equal to the credit availed on imported inputs cleared as such to the domestic market, an excise team visited its factory at Greater Noida, near Delhi.

"So far, we have detected duty evasion of Rs 5.32 crore for the period from March 2005 to September 2006. The assessee has accepted the duty liability and paid the amount. Further investigations are on," the spokesperson said.

The above cases are part of a total 882 cases, involving over Rs 1,400 crore of indirect tax evasion, booked by the authorities during the first half of the current fiscal. These include 442 cases of excise duty evasion for Rs 1,042.07 crore, against 385 cases for Rs 517.74 crore during the first half of 2005-06. In the case of customs, there have been 440 bookings involving duty evasion of Rs 366.13 crore during April-September 2006, against 645 cases for Rs 769.59 crore evasion during the whole of 2004-05, she added.