Commissioner of Central Excise and Service Tax B. Hareram has initiated garnishee proceedings under Section 87 of the Finance Act, 1994, against city and town municipalities and corporations in north Karnataka to recover service tax, its interest, and penalty along with late fee for not filing statutory returns.

Those facing action are the city corporations of Belagavi and Kalaburgi; CMCs of Jamkhandi, Rabakavi-Banahatti, Bidar, Yadgir, Shahpur, Surpur; TMCs of Talikoti, Indi, Mahalingpur, Muddebihal, Bhalki, Aurad, Wadi, Gurmitkal, Humnabad, Aland, Afzalpur, Shahbad, Jewargi, Chitapur, Basavakalyan, Chincholi and Sedam.

Mr. Hareram said here on Wednesday that these municipal bodies had rented out their properties, which was taxable under Sub-Section 90(a) and Clause 105(zzzz) of Section 65 of the Act with effect from June 1, 2007, and under Section 66B and 66E with effect from July 1, 2012.

Mr. Hareram made it clear that the local bodies were liable to pay service tax under rule 2(d)(E) of Service Tax Rules, 1994 read with Section 66D of he Finance Act, 1994.

Mr. Hareram requested the commissioners and executive officers to pay service tax with interest and file statutory returns to avoid day-to-day works getting hampered and once the recovery process was initiated.