Corporates question tax defaulters list that MoF sent to banks

Corporates have reacted strongly and questioned the process of recovery of disputed tax amounts as the Financial Intelligence Unit (FIU) of the Ministry of Finance has collected banks details of hundreds of companies and individuals.

A letter dated Aug 16, 2017 was issued by FIU to banks with the subject line: 'Forwarding of list of tax defaulters who are untraceable/have no assets for recovery'. An excel sheet of the so-called 'defaulters' was attached with the letter.

The sheet, accessed by DNA, shows that more than a thousand corporates and individuals, including leading MNCs, have been listed as tax defaulters under the heads 'No Assets' and 'Not Traceable'.

The banks were urged to share with FIU whether the listed entities were maintaining any account with them, details of such accounts and whether the said accounts were alive or dormant.

The Employees Provident Fund Organisation (EPFO) has been included in the tax defaulters list. Well-known companies like Vodafone International Holdings B.V., Nokia India PVT Ltd, Deccan Chronicle Holdings Limited and Essar Technology Limited too have appeared in the list under 'No Assets'.

"This is a kind of witch hunt," said a businessman whose name appears on the list. "Lack of coordination between government and officials," said J N Gupta, former executive director, SEBI.

"We are a 40-year-old company, the second largest port-loading company of India. We submitted all financial details to appropriate agencies. It is totally wrong if you put us in no-assets category. We are contesting in tax amassment, which is quite normal," said Rajiv Agrawal, MD & CEO of Essar Port, which is one of the companies which appeared on the 'hit-list'.

"Received no notice from the government and we have enough assets. How can they say we have no assets? Moreover, they have listed us as tax defaulters on a disputed matter," said BD Agrawal, CMD, Vikas WSP.

Emails sent by DNA to Vodafone and Nokia seeking comments did not elicit any response.

The excel sheet accessed by DNA revealed two lists of tax defaulters (who owe more than Rs 25 crore): One says 'No Assets' and the other 'Not Traceable'. Total 816 assessees are listed under the head of 'No Assets' and 204 are 'Not Traceable'.

The list has identified Vodafone International Holdings B.V, Nokia India Limited and Deccan Chronical Holding Ltd among the top five defaulters.

Talking to DNA, a finance ministry official defended the action, saying: "We had asked the banks directly about defaulters' banks accounts, but they tried to save their clients. That's when we have decided to follow other routes. We are not going in for a witch hunt, but we have to make all efforts at genuine tax recovery".