Casual approach of civic body results in Rs 5.88 cr loss

ST CORRESPONDENT
Saturday, 6 October 2018

The Pune Municipal Corporation took service tax from advertisement companies but they did not pay it to the service tax department.

PUNE: Due to the carelessness of Pune Municipal Corporation’s (PMC) Sky and Sign Department, the corporation has paid around Rs 5.88 crore, including penalty and interest on the principal amount of Rs 2 crore, to the Central government. 

This has happened because the civic body apparently collected service tax from advertisement companies but did not pay it to the Central government. Now, PMC has decided to file an appeal with Customs Excise and Service Tax Appellate Tribunal.

Vijay Dahibhate, head of Sky and Sign Department of PMC, said, “It is true that we paid Rs 5.76 crore to the Central Service Tax Department. Now, we have decided to file an appeal in the Service Tax Appellate Tribunal to waive off the tax, as there is no clear provision in law to pay service tax on the advertisements.”

The PMC took service tax from advertisement companies but they did not pay it to the service tax department. On 2012, PMC received a notice from the service tax department to pay tax from 2001 to 2007. However, the corporation took a causal approach and did not pay the tax. After that, the service tax department sent another notice in 2015 and mentioned an amount of Rs 5.88 crore (principal amount of service tax Rs 2.08 crore and penalty plus interest of Rs 3.80 crore). Finally, the corporation paid the total amount of Rs 5.88 crore to the Service Tax Department and decided to file an appeal in the Tribunal.   

Vivek Velankar, civic activist, said, “Action should be taken against the responsible officer. It is public money and it should not be wasted due to the causal approach of Pune Municipal Corporation (PMC) officials.” 

One of the senior officers of the corporation, who was handling the Sky and Sign Department’s charge earlier, said, “PMC collected service tax from advertisers but they did not pay it to the service tax department due to lack of coordination between Land Record Department and Sky and Sign Department. On the other side, there is no clear-cut provision in law about paying service tax of advertisement companies to Service Tax Department. So, we did not take Service Tax Department’s notice seriously. Under the strict directives of the central service department, we paid the amount but we decided to challenge it in the Tribunal.”

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