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Arrests of Construction Company director for Service Tax Evasion

The Officers of DGCEI, Bangalore Zonal Unit, Bengaluru arrested Shri. Sagar B. Muthappa, Managing Director of M/s. Vasoo Builders Pvt. Ltd. on 09.10.2015. M/ s. Vasoo Builders Pvt. Ltd is a company providing Works Contract Service, which had collected Service Tax to the tune of Rs.3.24 Crores and not remitted the same to the Government Account. Even though the assessee was collecting the Service Tax from his customers/clients, they had failed to remit the same to the Government Account.

OFFICE OF THE PRINCIPAL ADDITIONAL DIRECTOR GENERAL
DIRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE
NO. 6, “SHIVASHAKTHI”, 11TH CROSS,
WEST OF CHORD ROAD 2ND STAGE, BENGALURU

PHONE – 080 2359 8851 – 54: FAX – 23598217

DGCEI F.No.V/30/2015-16/BZU ,Date: 09.10.2015

PRESS NOTE

ARREST OF MANAGING DIRECTOR BY DIRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE,  BANGALORE ZONAL UNIT FOR EVASION OF SERVICE TAX

The Officers of DGCEI, Bangalore Zonal Unit, Bengaluru arrested Shri. Sagar B. Muthappa, Managing Director of M/s. Vasoo Builders Pvt. Ltd. on 09.10.2015. M/ s. Vasoo Builders Pvt. Ltd is a company providing Works Contract Service, which had collected Service Tax to the tune of Rs.3.24 Crores and not remitted the same to the Government Account. Even though the assessee was collecting the Service Tax from his customers/clients, they had failed to remit the same to the Government Account.

Intelligence gathered by the officers of DGCEI, BZU indicated that M/s. Vasoo Builders Pvt. Ltd, Bangalore with their office at No.5, 1st floor, Silver Glade, Wellington Street, Richmond town, Bangalore-560025 have evaded payment of Service Tax. An investigation was initiated and certain incriminating documents were recovered. It was found that the service provider, who was engaged in providing taxable services i.e., Construction of Commercial and Residential complexes/buildings on works contract basis, had failed to pay the Service Tax of Rs. 3.24 Crores for the period 2010-11 to 2015- 16 on the services so provided. It was also found that the service provider had collected Service Tax from his customers/clients. The Company has failed to file the statutory Service Tax returns, in addition to evading payment of tax. The tax dues, including interest recoverable is around Rs. 5 Crores.

As per Section 89 (1)(d) read with Section 89 (1)(ii) of The Finance Act, 1994, who ever collects any amount as Service Tax in excess of Rs. 50 Lakhs but fails to credit the same to the Government account within a period of 6 months from the day on which such payment becomes due, is liable for imprisonment for a term which may extend to 7 years. Such offences shall be cognizable as per Section 90 of the Act. In the instant case, the amount of Service Tax collected from the customers but not paid to the Government account which is beyond a period of six months, works out to Rs. 3.21 Crores.

In view of the above, the Service provider was arrested today i.e., on 09.10.2015 under Section 91 of the Finance Act, 1994 and produced before the Special Judge, Special Economic Offences Court, Bengaluru. The accused has been remanded to judicial custody till 15.10.2015.

DGCEI, Bangalore Zonal Unit has initiated several measures to target the erring assessees who are defrauding the Government. Focus is being laid on evasion prone commodities, evasion prone service sectors and appropriate action is being initiated in a systematic way to unearth evasion.

(D.P. NAGENDRA KUMAR)
PRINCIPAL ADDITIONAL DIRECTOR GENERAL

Categories: Service Tax
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