Net4 India Chief Held for Not Remitting Service Tax

The Service Tax Department has arrested Jasjit Singh Sawhney, Managing Director of IT firm Net4 India, on the charge of not remitting the levy collected to the Department. According to a senior Service Tax Department official, Sawhney may not have deposited Rs 6-7 crore.

Arrested on Friday night, Sawhney was produced before the Metropolitan Magistrate in Patiala House Court on Saturday, and granted conditional bail up to September 3, on payment of Rs 25 lakh immediately. He has been asked to pay Rs 75 lakh within 15 days and Rs 1 crore within a month thereafter.

This is the first arrest in Delhi and the third in the country on the charge of service tax collected but not deposited with the Government. However, the first arrest in Kolkata involved an amount of Rs 79 lakh, and the second in Mumbai involved Rs 1.96 crore. The Delhi case is much bigger. “We apprehend that a much larger part of the Rs 9-crore pending liability for 2012-13 is involved in this case. It could be Rs 6-7 crore,” a senior service tax department official said. He said a chunk of the total liability was collected by the company from its clients as service tax to be paid to the exchequer, but was not deposited. The Delhi wing of the Service Tax Department got intelligence about this in February. Accordingly, the Department asked Sawhney to deposit the amount. Sawhney gave an undertaking, but failed to comply.

This May, the Department was given powers to arrest. Any person who has collected service tax of over Rs 50 lakh and fails to deposit it with the Centre beyond six months is liable to be prosecuted. The person is punishable with imprisonment for a term up to seven years.

The revenue authorities are facing a tough time with those stopping to file service tax returns, apart from the evaders. Acting against these persons is crucial, as the Government aims to collect service tax worth Rs 1.80 lakh crore during 2013-14. This requires a growth rate of 36 per cent over 2012-13. However, during first four months (April-July) of the current fiscal, service tax collection grew at the rate of 15 per cent to reach Rs 43, 190 crore.

Business Line, New Delhi, 01-09-2013