The UT excise and taxation department has slapped a notice on the Chandigarh municipal corporation for evasion of luxury tax applicable on community centres.
The administration had, on August 4, 2011, notified the Punjab Tax on Luxuries Act 2009, which said that proprietor of a hotel or a banquet hall has to pay 4% luxury tax, but the MC, which has 37 community centres covered under this law, has not even registered for the tax payment.
Of the 37 centres, four are air-conditioned (AC) and cost Rs. 11,236 per day each, while the rate for the remining is Rs. 5,618 a day.
The notice to the MC, which seeks the tax on monthly basis from August 8, 2011, onwards, reads: “As per the information available with the department, your organisation is operating a hotel/banquet hall/auditorium/open space/ Bhawan/ lodging house/community centre and are being given on rent for holding events which are either on regular or occasional basis. You are herby directed to apply for registration immediately under the Act so provided.” Though no calculations has been done, as the MC has been told to check its own record and pay accordingly, the amount is estimated to be around Rs. 6 lakh, as per officials.
Earlier this year, the corporation was also served a notice for non-payment of service tax.
When contacted, UT assistant excise and taxation commissioner RC Bhalla confirmed that the notice was issued to the corporation, “The MC will be liable for action if it fails to comply with the order.”
Despite repeated attempts, MC commissioner Vivek Partap Singh was not available for comment.
The excise and taxation department has reportedly acted on a representation highlighting the irregularity, submitted by city-based advocate Ajay Jagga to UT administrator Shivraj Patil. Jagga said that MC was causing a huge loss to the exchequer of the administration by not making the payment of luxury tax on the charges being collected for renting out community centres.
*MC’s community centres: 37 (4 of them AC)
*Charges are `11,236 a day for AC, `5,618 otherwise
*Luxury tax is at the rate of 4%