CAG raps CEA for failure to pay over Rs 76 lakh service tax

New Delhi, Mar 28 (UNI) The Comptroller and Auditor General of India (CAG) has castigated the Central Electricity Authority (CEA) for its failure to pay Rs 76.39 lakh as service tax to the government.

In its report for March ended 2005, CAG says the CEA not only failed to collect from its clients Rs 62.10 lakh as service tax, which it is liable to pay to the government, but also exposed itself to an interest liability of Rs 14.29 lakh (as on August 2005) by becoming an assessee in default before the Department of Central Excise.

According to CAG, the CEA, under the Ministry of Power, is engaged in providing consultancy services against consultancy fees, and is accordingly liable to service tax.

From October 1999 to February 2005, the CEA charged consultancy fees aggregating Rs 963.25 lakh from the clients.

The service tax at the rates, specified in the Finance Act 1994, on the amount worked out to Rs 62.10 lakh which the CEA failed to recover from clients and deposit it with the government.

The CEA also exposed itself to the additional liability of interest amounting to Rs 14.29 lakh up to August 2005 for the delay in remittance of service tax.

In May 2005, the CEA stated that it had not been registered as an assessee with the government for payment of service tax and the grant of exemption from payment of service tax had been taken up with the Central Excise Department.

However, the Department clarified in August 2005 that no exemption had been provided to any government department or public sector undertakings in respect of any taxable services rendered by them and asked CEA to comply with the service tax law, CAG observes.

Thus, the total liability incurred by the CEA owing to its failure to fulfill its obligations of payment of service tax amounted to Rs 76.39 lakh (initial tax and interest), it says.

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