Giving two hoots to the UT excise and taxation department, the Chandigarh municipal corporation (MC) has failed to pay luxury tax applicable on community centres, despite repeated reminders.
After failing to evoke any response from the corporation, the excise and taxation department has now issued a final notice for the payment, failing which action would be initiated to recover the amount estimated to be around Rs. 10 lakh.
As per official record, the first notice of tax evasion was slapped on March 2, 2012, followed by another notice on May 1, 2012. The third notice was issued on October 14, 2013. The MC has to pay the tax on monthly basis from August 8, 2011, onwards.
The corporation has also failed to comply with the repeated directions to apply for registration under the Punjab Tax on Luxuries Act, 2009, which is applicable to Chandigarh.
Confirming the development, UT assistant excise and taxation commissioner RC Bhalla said final notice was issued to the corporation a few days back.
He further said the officials of the department have been directed to personally take up the case with the official concerned of the corporation. “We will initiate action against the MC if it again chooses not to act on the notice,” said Bhalla.
When contacted, MC chief accounts officer Desh Raj said, “The luxury tax is not applicable on community centres as they are for general public. The community centres are rented out to the general public for their benefit and not with a motive to generate revenue.”
However, Bhalla clarified that as per Punjab Tax on Luxuries Act, 2009, a proprietor of a hotel or a banquet hall has to pay 4% luxury tax.
As per record, the MC has a total of 37 community centres. Of the total, four are air-conditioned (AC) and can be taken for rent at Rs. 11,236 per day each, while the rate for the remaining is Rs. 5,618 a day.
By not making the payment of luxury tax on the charges being collected for renting out community centres, the MC has been causing a huge loss to the government exchequer.
Interestingly, when a resident defaults on payment of water or other bills, the MC wastes no time to impose penalties, while in this case it has been ignoring and violating the law.
Despite repeated attempts, MC commissioner Vivek Partap Singh was not available for comment.
The excise and taxation department had acted on a representation highlighting the irregularity, submitted by city-based advocate Ajay Jagga to UT administrator Shivraj Patil.