Notice served over non-payment of Rs 85-crore service tax.
The Mumbai Police — known for its efficiency in providing security on a par with global standards and often compared with the Scotland Yard — has earned Rs 850 crore by providing security-related services to private parties, including organisers of the Indian Premier League (IPL) and other cricket matches.
The police department’s fee income is based on the estimates of the service tax department, which has issued a demand notice to the police.
The service tax department, Mumbai, has issued a demand notice to the Mumbai Police for the payment of Rs 85 crore as tax, saying that police is liable to pay tax for providing security services to non-statutory entities. Service tax commissioner Shushil Solanki confirmed that the notice had been issued last month.
Security services are subject to service tax and providers need to collect this from users and pay to the department. However, the Mumbai Police has not even got itself registered for service tax. Sources in the service department say that several reminders had been sent to the Mumbai Police to get itself registered and deposit tax money. Even the police and security agencies like the Central Reserve Police Force (CRPF) and the Central Industrial Security Force (CISF) pay service tax when they provide security to private commercial organisations.
Comments from Mumbai police could not be obtained.
It’s not only the police department that is on the tax authority’s radar, hundreds of Mumbai-based private security agencies are also facing inquiries and actions from the service tax department. Last year, the department had collected Rs 152 crore as service tax from private security agencies. However, an official sources says many of the several hundreds of such companies operating in the city were neither registered with tax department nor with the police.
A showcause notice was also served on to Tops Security (Topsgrup), the country’s leading private security provider, over non-payment of service tax to the tune of Rs 17 crore, according to sources in the department. M I Jaisinghani, president, (business support), Topsgrup, says: “We have received a notice for short payment of service tax for past years, as estimated by the service tax authorities. There were some difficulties in reconciling our estimate with that of the department. We have have reconciled the figures and the matter will soon be resolved. Our current service tax payments are regular.”
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The service tax department has attached one of the bank accounts of Tops Security. It had recently also attached bank accounts of four other private security agencies and collected Rs 8 crore.
A department official says these agencies had been collecting taxes but not paying those to the government. Besides these, there are several other private security agencies, most run by retired army and police officers, that have been facing the department’s ire over non-payment of service tax.
The department also has powers to attach bank accounts of service users and directly collect tax arrears, which it has done in the case of a leading listed real estate player in Mumbai and collected tax arrears.