MC 'evades' service tax of over Rs 2 crore

  • Sachin Sharma, Hindustan Times, Ludhiana
  • |
  • Updated: Jan 04, 2013 23:01 IST

The municipal corporation of Ludhiana these days may be acting tough against violators who have not submitted their house tax, but the corporation itself has failed to deposit service tax worth crores of rupees.

According to sources, the civic body is a defaulter of service tax of more than Rs 2 crore to be submitted to the central excise department on the account of services provided by it in the form of rented accommodations and by selling space for advertising in the city in the period from 2007 to 2010.

A notice, asking the MC authorities to submit the service tax on the account of selling space across the city and furnish details about rent income, has also been served to corporation by the department.

The sources revealed that the corporation had to deposit service tax worth Rs 2 crore in lieu of earnings made by selling space for allowing advertisers to put their signboards and hoardings across the city during this period, while the service tax on rent was yet to be assessed. The civic body has failed to provide the details of its income through rented accommodations and service tax on it is yet to be assessed.

"What is more appalling is the situation that the corporation is not providing details about the income from rent throughout this period," an officer from the central excise department said.

The sources disclosed that the total taxable income of the MC from rented accommodations from 2007 to 2010 was around Rs 3 crore and service tax on this would be around Rs 30-35 lakh.

What is more disgraceful for the MC authorities is the fact that it is the only corporation in the Ludhiana range of central excise that has not submitted a single penny of service tax. Other municipal corporations in the range have at least submitted a partial amount of the service tax on rent.

The Amritsar municipal corporation has submitted a service tax of Rs 29 lakh out of total tax of Rs 38 lakh, while Jalandhar municipal corporation has deposited Rs 36 lakh as service tax against the total tax of Rs 40 lakh.

Ludhiana MC additional commissioner Devinder Singh said they had received a letter in this regard from the central excise department two days ago.

"We are examining the letter and will take legal opinion to look into the options available with us. As the financial condition of the MC is not very good, we will have to study various legal provisions in this connection, as there can be different interpretations of the provisions of service tax," he added.

He, however, did not mention any time frame for replying to the notice.


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