THIRUVANANTHAPURAM: An indefensible delay on the part of the cash-strapped Kerala State Road Transport Corporation (KSRTC) and the Government of Kerala (GoK) in effecting service tax on Corporation’s AC bus passengers in time cost the corporation Rs3.65 crore.
The CAG that revealed the issue also said in a 2018 February report that the Rs3.65 crore, which included a penal interest of Rs61 lakh, could increase if the payment of dues was prolonged further.
Businessbenchmark.news could confirm that the dues were not paid until January, 2018 but could not verify whether KSRTC has already paid the dues by now and settled the issue before the amount could escalate further. Out of the four statutory corporations in Kerala, CAG is the sole auditor for KSRTC
The issue had its genesis in a Government of India (GoI) notification dated March 1, 2016, mandating levy of service tax on passengers of the Corporation’s air conditioned buses with effect from June 1, 2016.
“As service tax became leviable from June 1, 2016 and in order to obviate payment of interest on delayed payment of service tax, the Corporation ought to have obtained approval of Government of Kerala (GoK) sufficiently in advance for its levy through fare hike with effect from June 1, 2016,” the CAG observed.
Despite this, the Corporation slept on it and requested GoK only on May 13, 2016 to take a decision as to whether the service tax was to be collected from the passengers or to remit it from the existing revenue of the Corporation.
As the Corporation did not receive directions in this regard from GoK, the Corporation just kept quiet leaving the dues to mount along with the penal charges until November 22, 2016 when the GoK approval came.
The Corporation started collecting and remitting service tax with effect from December 16, 2016 only. In fact, the Corporation and GoK took about nine months for taking a final decision on the subject.
As a result, the Corporation did not collect service tax amounting to Rs3.05 crore from passengers during the period June 1, 2016 to December 15, 2016. Hence GoI advised the Corporation to make payment of the service tax on the value of service provided during June 1, 2016 to December 15, 2016 along with interest accrued on it.
Hence, the Corporation became liable to pay service tax from its revenue along with penal interest of Rs61.14 lakh. KSRTC was yet to remit the same (as of January 2018).