Builders, manpower firms main tax evaders

BENGALURU: Have you ever wondered what happens to the money you give f or service tax while buying a property? It seems not all builders are remitting that to the government. For, builders and manpower providers constituted nearly 65% of se rvice tax (ST) evaders in Bengaluru during the last financial year. The department had detected tax evasion of over Rs 310 crore in Bengaluru in 2014-15 but recovered only about Rs 140 crore. A senior official from the anti-evasion wing of the service tax department told TOI: "Over the years, we've learnt that these two sectors are most prone to evasion. In case of builders, many of them have multiple projects going on and use the money they collect as ST from customers to invest in another project instead of paying the government." He further said, "The reason only 50% of the amount that we detected as evasion could be collected was because a lot of them dodge officials, shift offices and addresses after completion of projects. Same modus operandi is employed by manpower agencies." In a rare instance, the department on Wednesday arrested P Venkataramappa, director of V Bright Facility Management Services and proprietor of V B Security Services. He had evaded paying Rs 5 crore as ST. "He had collected a total Service Tax of Rs 2.24 crore from 2004 to 2010 from his clients but failed to remit the same to the government. He has to pay a penalty and interest on this. Later, he started another firm and continued evading paying ST," the department argued in the Special Economic Offences Court on Friday, which has remanded him in judicial custody. As per Section 89(1) (d) read with Section 89(1)(ii) of the Finance Act, 1994, he is liable for imprisonment for up to seven years. "We learnt that he had clear intent of not paying the tax and was deliberately shifting homes and addresses, even as he is expanding his business. From Bengaluru, he even does business in Hyderabad and Tamil Nadu now," the official said. -TOI