MC fails to collect service tax, pays Rs 3 cr to Centre | chandigarh | Hindustan Times
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MC fails to collect service tax, pays Rs 3 cr to Centre

The Chandigarh municipal corporation’s negligence has cost nearly `3 crore to the exchequer, as the civic body failed to collect service tax from April 2011 to March 2014 and ending up paying the money from its coffers to the central excise and service tax department.

chandigarh Updated: Oct 03, 2014 12:39 IST
Hillary Victor

The Chandigarh municipal corporation’s negligence has cost nearly `3 crore to the exchequer, as the civic body failed to collect service tax from April 2011 to March 2014 and ending up paying the money from its coffers to the central excise and service tax department.


The matter has come to light after the audit report of the corporation for financial year 2013-14 was released on Wednesday.

The report has called for action and asks that responsibility be fixed for the officials/officers, whose negligence caused this loss.

HT has learnt in September 2013, MC commissioner, Vivek Pratap Singh sought explanation from the officers concerned and tried to fix responsibility. However, the matter has since been put on hold.
Where is the service tax levied?

The corporation collects service tax on leasehold commercial property (plots, buildings, eating joints and petrol pumps) on festival stall charges, revenue from the craft centre, cable operators, telephony signal towers, rent of taxi stands, the car bazaar, ground rents, the apni mandis, community centres and advertisement space.

For the past two years, the MC was thus supposed to collect `2.5 crore, but collected only `35 lakh. There is a shortfall of `2.43 crore and nearly `50,000 as interest for late payment.

Speaking to HT, Deshraj, MC chief accounts officer, said, “We will be fixing accountability.”

The central excise and service tax department sent various show-cause notices to the MC for non-payment of service tax since 2007 to the tune of nearly `7 crore, but till date the MC has paid them only `3 crore.

“We have hired a tax consultant, who has made a submission to the central department that the figure of Rs 7 crore is not correct as there are various types of revenue that do not come under the purview of service tax. The consultant advised the MC to pay Rs 2.93 crore,” said a MC councillor. The notification issued by the government states that all lessees of commercial property auctioned since July 1, 2007, are bound to pay service tax at the rate of 12.36% per year on the lease money/ground rent charged by the estate office.

Report scathing on official negligence

Castigating the leisurely mood in which the MC officials reportedly operated, which led to the civic body having to refund Rs 25,000 to a Sector-44 resident after having after not providing space booked for a ladies sangeet function, the report said, “It seems, the officer, who dealt with the case was in leisurly mood.”

The consumer disputes redressal forum had directed the MC to pay a compensation of Rs 25,000 along with refund of Rs 562 to a Sector-44 resident Amar Singh Ghuman, who was forced to make alternative booking at the eleventh hour as the MC did not give him the booked space.

WHERE THE SERVICE TAX SHOULD HAVE BEEN LEVIED

Leasehold commercial property (plots, buildings, eating joints and petrol pumps) on festival stall charges, revenue from the craft centre, cable operators, telephony signal towers, rent of taxi stands, the car bazaar, ground rents, the apni mandis, community centres and advertisement space.

For the past two years, the MC was thus supposed to collect Rs 2.5 crore, but collected only Rs 35 lakh. There is a shortfall of Rs 2.43 crore and nearly Rs 50,000 as interest for late payment.

The report has called for action and asks that responsibility be fixed for the officials/officers, whose negligence caused this loss

Tomorrow MC fails to recover Rs 22 lakh from councillors