C & AG puts Municipal Corporations and CISF in Dock
C & AG has reported that forty seven municipalities and twelve other assessees including Municipal Corporations, Urban Development Authorities, South Central Railways, State Road Transport Corporation etc., in Hyderabad I, II, III, Guntur, Tirupathi, Visakhapatnam I and II Commissionerates, rented/leased out its immovable properties like shops, godowns, sheds, show rooms, slaughter houses etc., in the course of its business during the period between June 2007 and May 2009. The C & AG states that these assessees rendered such services without getting registered and collected Rs. 129.76 crore during the said period but did not pay service tax of Rs. 15.76 crore along with interest and penalty.
C & AG further reports that CISF units at Coimbatore and Kalpakkam, coming under Coimbatore and Chennai III Commissionerates, provided security services to the Airport Authority of India, Coimbatore and Madras Atomic Power Station (MAPS), Kalpakkam and collected service charges totalling Rs. 34.90 crore between April 2006 and February 2009. CISF did not register with the department and did not pay service tax of Rs. 4.30 crore payable on the value of taxable service provided.
With regard to renting of immovable property belonging to municipalities, municipal corporations and urban development authorities, the issue could be relevant in many more municipalities and municipal corporations across the country. Likewise, CISF is engaged in providing security for many PSUs and even large private sector enterprises which may be liable to service tax. For once, we believe that the C & AG hit the bull's eye.