In a major action, the Directorate General of Central Excise Intelligence (DGCEI) in Mumbai has booked 1,800 debt recovery agencies working for a prominent private bank for service tax evasion to the tune of over Rs200 crore.
These agencies, situated in Mumbai and other parts of the country, are assigned the job of recovering debts and loans from defaulters.
Sources in DGCEI said that the agencies have been evading taxes from 2007 to 2012.
The bank that hired them paid close to Rs2,000 crore as commission in last five years.
“These recovery agencies failed to pay the tax and have been given time till October to pay the entire evaded amount,” said a DGCEI official, requesting anonymity.
Sources said that DGCEI has been working on the case for the last six months, and during the investigation, searches were conducted on some of these recovery agencies in Mumbai, Pune, Nashik, Nagpur, Delhi, and other parts of the country.
“The investigation is still not complete and will go on for over a month,” the official said, adding that the DGCEI has also sent notices to all these recovery agencies.
Sources said that these recovery agencies were paid from 3% to 20% commission on the amount recovered from defaulters.
They added that out of the total dues of over Rs200 crore in tax, only a few agencies have admitted to evasion, which amounts to only Rs15 crore.
Strict action would be taken against agencies that fail to pay service tax dues by October: sources said properties and bank accounts of the agencies would be attached if they fail to meet the deadline.
Besides this particular private bank, recovery agencies of some other banks and insurance companies are also under the DGCEI scanner.