C' Weath Games service tax evasion may run into crores

After inflated prices, missed deadlines and mounting costs, comes service tax evasion. The acts of ommission and commission don’t seem to have an end when it comes to the Commonwealth Games (CWG) 2010.

Information accessed by DNA indicates there has been an alleged attempt towards a massive evasion of service tax by both government and private agencies involved in the Games. More startling, perhaps, is the fact that they have not even registered with the Service Tax department.

Several domestic, foreign firms and government agencies have got contracts for the Games and are liable to pay service tax at about 10% of the gross cost.

The attempted evasion, which is now under the scanner of a crack team set up by the Service Tax Commissionerate, could run into several crores. The team, which is being headed by an officer of the rank of a joint commissioner, will seek copies of documents of contracts given by the organising committee (OC) to private firms and the works carried out by government agencies including CPWD, DDA, MCD and PWD.

“The works carried out by private firms and government agencies are being scrutinised. The information with us indicates several private contractors and government agencies have either not registered with the service tax department or have allegedly evaded their tax liabilities,” a senior official from the directorate of Service Tax, Mumbai, told DNA

The agencies under the scanner of the tax department include the Sports Authority of India, which, as per preliminary investigations, is not registered with the Service Tax department.

In May this year, service tax authorities had stumbled upon an alleged evasion of the tax by OC. The OC, which paid the hosting fee of over Rs58 crore to the London-based Commonwealth Games Federation, had not paid up their liability of Rs8.46 crore to the service tax department. The service tax department had subsequently issued summons to the OC and asked them to pay up their liability, which they did.

The service tax department is likely to investigate the works relating to renovations of stadiums, street lighting, development of bus depots, Metro expansion, power plants, at the state level; and development of sports infrastructure, training of teams and works carried out by MTNL, information and broadcasting ministry, health ministry, Archaeological Survey of India and security related work carried out by the ministry of home affairs.