L&T, ONGC sub-contractors evade Rs 300 cr service tax

The subcontractor neither claimed service tax from its clients ONGC and Oil India, nor did it deposit it with the govt

The government today said it has detected service tax evasion of about Rs 300 crore by sub-contractors of Oil and Natural Gas Corporation (ONGC), Oil India and Larsen & Toubro.

The estimated evasion of service tax is more than Rs 200 crore by Delhi-based Shiv Vani Oil and Gas Exploration Services Ltd, which provides its services to ONGC and Oil India Ltd.
 
“On the basis of specific information, officers of the Directorate General of Central Excise Intelligence (DGCEI) have recently booked a case of service tax evasion against Shiv Vani Oil and Gas Exploration Services Ltd. They admitted that due to financial constraints they had not deposited service tax to the government,” the Central Board of Excise & Customs said in a statement today.

Officials said the subcontractor neither claimed the service tax from its clients ONGC and Oil India, nor did it deposit it with the government, but in case of ONGC the amount was recovered by the sub-contractor from the construction company but it was not deposited with the government.

It dealt a double blow to the excise department as ONGC claimed input tax credit for the service tax it paid to the sub-contactor, said one official.

DGCEI booked a case of service tax evasion of Rs 100 crore against sub-contractors of L&T. It found evasion of service tax on work contract service/construction services by several sub-contractors of L&T Construction, following which searches were conducted at various places including the construction division of L&T at Chennai and premises of one of its sub-contractor group companies.

L&T’s sub-contractors include Chitra Builders Pvt Ltd, Coastal Infratech Pvt Ltd, Pratik International Infrastructure Pvt Ltd, Coastal Infra, Pratik Associates, and Chitra Construction Company.

“The sub-contractors are indulging in the evasion of service tax as they are receiving the applicable amount of service tax form L&T, but are not depositing the same with the government account properly. The sub-contractor companies are also not filing service tax returns in a regular manner. Most of the sub-contractor companies are manipulating the details of work orders and job contract values and amount of service tax amount in their records,” said the statement.