Evasion of Service Tax by banks – on government transactions - MO Circular
During the course of audit at the State Bank of Mysore (Treasury Branch), Mysore, conducted by Central Excise Commissionerate, Mysore, a case was detected where 'commission' received on Government transactions and deducted by 'SBM G-SEVA Branch' Bangalore (which functions at 'Nodal Bank') is not being taken into consideration while discharging service tax liability by 'currency chest branches' of State Bank of Mysore and service tax is paid only on net amount of commission received.
Board feels that it is possible that similar practice is being followed by other banks, in as much as their nodal banks may not have been registered with the department and also may not be paying service tax on the commission netted by such nodal banks.
So DGST wants the field formations to detect similar evasion by other banks and inform the DG about the results.
DGST MODUS OPERANDI CIRCULAR No. , Dated : March 14, 2008