Service Tax evasion of Rs 5-cr detected in searches at spas

Service Tax department has conducted searches at more than 40 spas, health clubs and beauty parlours, located in posh areas of the city, and detected tax evasion of more than Rs 5 crore.
A team of sleuths, headed by Commissioner of Service Tax (Mumbai), Sushil Solanki, carried out simultaneous searches in Bandra, Colaba and Juhu areas last week, an official said today.
"Searches were conducted in some well known spas like Sabi spa, Aura Wellness, Sukho Thai, Palm Spa and it was detected that most of these centres have been collecting service tax from customers but are not paying it to the Service Tax Department," he said.

According to the official, Sabi Spa, which has been into business for last 5 years has collected service tax dues from its customers but used them for personal expenditure.
Tax officials detected the evasion to tune of Rs 1.04 crore in this case.
"They (Sabi spa) paid Rs 35 lakh in cash and through post-dated cheques and have declared tax liability of Rs 80 lakh under the voluntary compliance scheme," the official said.

He said Aura Wellness was collecting one-time non-refundable franchise fee ranging from Rs 2 lakh to Rs 20 lakh, apart from 'contract charges' for providing infrastructure to the franchisees.

"Initial investigation suggested that Aura has evaded the tax to the tune of Rs 98 lakh and its franchisee outlets in Mumbai have evaded tax amounting Rs 86 lakh. They too have given post-dated cheques worth Rs 30 lakh," the official said.
Out of their total service tax evasion of Rs 40 lakh, Sukho Thai has paid Rs 10 lakh in cash and submitted post-dated cheques for the balance amount.