Hyderabad: In a first, a city-based entrepreneur was arrested on Tuesday for alleged service tax evasion to the tune of Rs 1.5 crore.

Rajasekhar Buggaveeti, managing director and chief executive officer of Creative Multimedia, was apprehended for collecting service tax but not depositing it with the government.

1st arrest for service tax default

In a first, a city-based entrepreneur was arrested on Tuesday for alleged service tax evasion to the tune of Rs 1.5 crore.

Rajasekhar Buggaveeti, managing director and CEO of Creative Multimedia, was arrested for collecting service tax but not depositing the same with the government. This is the first arrest for service tax evasion in the city. Buggaveeti was arrested and produced in a local court.

Buggaveeti’s firm, Creative Multimedia, also known as Dilsukhnagar Arena, is famous for digital media education in the city and has been training students in animation, VFZ and other areas through vocational courses.

Sources said that Buggaveeti was collecting service tax at 12.36 per cent from the students of his academy, but not depositing the amount with the Central Board of Excise and Customs despite the fact that he was registered with the Board and was liable to pay service tax.

He defaulted on service tax of about Rs 1.5 crore, payable over the past year. A provision for arrest on evasion of service tax has now been made available through an amendment in the Finance Act 1994. This is the first time a businessman has been apprehended.

Surprisingly, Creative Multimedia is a well-known company and has a sound foothold. Buggaveeti was also awarded the Best Digital Media Academy in India award in the Education Excellence Awards category for 2012 by a private entity.

Minister of state for HRD Shashi Tharoor presented Buggaveeti with the award last year. An official release from M.K. Singh, commissioner (Customs, Central Excise and Service Tax) Hyderabad II, said, “Rajasekhar has committed the cognisable offence of collecting service tax and not depositing the same with the government, an offence under Section 89(1) (d) of the Finance Act, 1994.”

Buggaveeti was arrested and produced before the Court of the Special Judge for Economic Offences in Nampally court complex on Tuesday. He was remanded by the court to judicial custody.