K'taka initiates action on Bharti for evading VAT

Bangalore, Mar 25: Karnataka Commercial Tax Department has taken measures against Bharti Televentures Ltd, leading telecom company, to recover tax by initiating actions including freezing of bank accounts of the company.

The department had unearthed a huge tax evasion incident of over Rs 26 crore from the company that provides broadband services through Optical Fiber Cables (OFC).

Commercial Tax Department Commissioner Harish Gowda told UNI that the Bharti Televentures Ltd, providing broadband services under brand name of Airtel, was issued notice for the alleged tax evasion for the period 2005-06 and served demand notice to pay tax and penalty amounting rupees Rs 26 crore.

He said a team led by Deputy Commissioner of Commercial Taxes A K Chitaguppi had unearthed the tax evasion by the company which manufacture and sell the light energy to its broadband customers for transferring data at highspeed, which comes under the category of the sale of goods. The broadband provider, however, questioned the department's claim with the Karnataka High Court.

Mr Gowda informed that the High Court refused to grant a stay to the department's initiative and steps had been launched to recover the tax and remmit it to state exchequer.

It may be recalled that the Commercial Tax Department had successfully contended in the High Court that OFC operates on light energy, which was artificially created by the service providers and sell it to customers for the purpose of data transmission and information, on the OFC broadband line. Without such energy, data or information cannot be transmitted.

The department also contended that whoever sells light energy was liable to pay VAT as it came under the category of goods, and hence its sale constituted taxable turnover attracting thus VAT at 12.5 per cent.

UNI