The Chandigarh Transport Undertaking (CTU) imposed a burden of nearly ₹6 crore on non-AC bus passengers to recover service tax applicable on AC buses since 2016, an audit by the Comptroller and Auditor General (CAG) of India has revealed.
The action of the transport department is not acceptable, as it imposed tax burden even on those who don’t travel in AC buses, said Sanjeev Goyal, director general of audit (central).
CAG has also directed CTU to conduct an inquiry to identify the officials responsible for the violation.
As per the audit’s findings, CTU was liable to charge service tax at the rate of 6% on the transport of passengers by stage carriage AC buses with effect from June 2016 till June 30, 2017, and goods and service tax (GST) at the rate of 5% on such services with effect from July 2017. The tax collected was to be further deposited with the government. However, CTU failed to levy the tax for years.
It was only after an inquiry in July 2018, made by the director general, GST intelligence, that CTU in 2020 belatedly deposited service tax/GST amounting to ₹5.89 crore by using funds from the government exchequer, as it never collected the tax from passengers.
{{/usCountry}}It was only after an inquiry in July 2018, made by the director general, GST intelligence, that CTU in 2020 belatedly deposited service tax/GST amounting to ₹5.89 crore by using funds from the government exchequer, as it never collected the tax from passengers.
{{/usCountry}}Goyal said the transport department failed to implement the statutory requirement of the collection of service tax and GST from the users of service and instead paid it from government exchequer.
Further, in their reply, the department stated that of the total amount submitted, the ₹5.53 crore paid as service tax was being recovered from passengers with effect from January 16, 2020, through increase in the bus fares, daily and monthly passes and concessional tickets, he said, adding that imposing the tax burden even on non-AC passengers was not acceptable.
Notably, before the fare hike, the charge for local non-AC buses was ₹5 for the first 5 km, ₹10 for five to 10 km and ₹15 for 10 km and above.
To recover the tax arrears, in January 2020, CTU had increased the rates of the second and third slabs by ₹5 each, while not changing the first slab’s rate.
In local AC buses also, the first slab of ₹10 had been kept the same. In the second slab, the fare was increased from ₹15 to ₹20; and from ₹20 to ₹25 for third slab. The charges for the daily and monthly passes were also increased by over 50%.
The increase in bus fares had come after around two years.
When contacted, Pradhuman Singh, director, transport, Chandigarh, said, “I will look into the matter. A report will be sought from the officials concerned,” he said.