State-run enterprises booked for service tax evasion

By Vijay Kumar

A few defaulters including State owned companies have been evading service tax payment to the tune of Rs.3 billion annually - a significant sum compared to the Rs.8 billion revenue that the government gets from around 200,000 small service providers, out of a total of 400,000 assessed for service tax. In a written reply in the Rajya Sabha, Minister of State for Finance S.S. Palanimanickam named state-run firms like the Airport Authority of India, Hindustan Aeronautics Ltd - and Indian Airlines as well as private companies like Jet Airways, Sahara Airlines, Hyundai Motors, United Breweries and IBM India, which have defaulted in payment of service tax worth Rs. 100 million or more.

The biggest defaulter has been AAI, which evaded payment of service tax of Rs.1.34 billion in 2004-05, while HAL of Kolkata and Bangalore together defaulted in paying Rs.260 million the same year.

Indian Airlines owed the government Rs.150 million and Rs.273 million in 2005-06 and 2006-07 respectively.

Other defaulting companies included State bank of India's MICR cheques processing centre at Mumbai, which owed service tax worth Rs.490 million for 2004-05, United Breweries, Hyundai Motors, and Jet Airways.

Evasion of course has a government definition – not paying what they want you to pay.