Friday, August 4, 2017

CAG scanner on actors for service tax anomalies

A number of Bollywood stars are under the scrutiny of Comptroller and Auditor General (CAG) which has detected at least 156 cases of non-compliance of rules and short payment of service tax, with revenue implication of more than Rs 50 crore.
CAG report, tabled in Parliament on Friday, has pointed out anomalies in collection of service tax from actors Salman Khan, Ranbir Kapoor, Ajay Devgn, Riteish Deshmukh and Arjun Rampal. While the service tax authorities have told CAG that show-cause notices have been servd to Devgn, Deshmukh and Rampal, the department has not clarified what action it has initiated against Khan for short payment.


"During the examination of records of Khan, Rampal, Deshmukh and Devgn, we observed from the agreements between producer and actors that the producers, being service recipients, agreed to provide for and bear expenses relating to arrangement of the services for travel, lodging and boarding of the make-up artist, hair stylist and spot boy," the report said. Though these services fall in the ambit of additional consideration directly and inextricably linked to the services provided by the assessees to the said service recipients, the value of this additional consideration was not included in taxable value of the assesses, the auditor noted.
In case of actor Ranbir Kapoor, the CAG said: "We noticed two instances where for the same film shot in India and abroad, the payment for the portion shot abroad was arranged from foreign companies, thereby the service was made to look as export of service with no tax liability."


"Kapoor acted in the movie 'Ae Dil Hai Mushkil' produced by Dharma Productions Pvt Ltd, shot both in India and New York. He received a consideration of Rs 6.75 crore from a foreign company, ADHM Films Ltd. (UK), based in London for the film shot in UK and did not pay service tax of Rs 83.43 lakh treating the same as export of services," the auditor pointed out.

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