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Top companies booked for service tax evasion
March, 07th 2007

Several top companies including some state-run enterprises have been booked for service tax evasion, the Rajya Sabha was informed Tuesday.

A few defaulters alone among top government and private companies have been evading service tax payment to the tune of Rs.3 billion annually - a significant sum compared to the Rs.8 billion revenue that the government gets from around 200,000 small service providers, out of a total of 400,000 assessed for service tax.

In a written reply in the Rajya Sabha, Minister of State for Finance S.S. Palanimanickam named state-run firms like the Airport Authority of India (AAI), Hindustan Aeronautics Ltd (HAL) and Indian Airlines as well as private companies like Jet Airways, Sahara Airlines, Hyundai Motors, United Breweries and IBM India, which have defaulted in payment of service tax worth Rs.100 million or more.

The firms were booked by the Directorate General of Central Excise Intelligence, he said.

The minister said that six public sector units accounted for tax evasion worth Rs.2.32 billion in 2004-05, while 13 others belonging both to the public and private sectors together defaulted in paying Rs.2.11 billion in 2005-06. In the next year, nine companies were booked for service tax evasion totalling Rs.2.98 billion.

The biggest defaulter among them has been AAI, which evaded payment of service tax of Rs.1.34 billion in 2004-05, while HAL of Kolkata and Bangalore together defaulted in paying Rs.260 million the same year.

Indian Airlines have been listed as an incorrigible defaulter. It owed the government Rs.150 million and Rs.273 million in 2005-06 and 2006-07 respectively.

Other defaulting companies included State bank of India's MICR cheques processing centre at Mumbai, which owed service tax worth Rs.490 million for 2004-05, United Breweries, (Rs.120 million for 2005-06), Hyundai Motors (Rs.100 million for 2005-06) and Jet Airways (Rs.160 million for 2005-06.

The minister said the government was taking appropriate legal action to recover service tax from them.

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