DLF under scanner for alleged service tax evasion

New Delhi: Real estate major DLF has come under the scanner of central revenue officials for allegedly evading service tax to the tune of about Rs 30 crore.

A case against DLF has been registered by the Directorate General of Central Excise Intelligence (DGCEI) for alleged non -payment of service tax over transfer of development rights to other firms, official sources said.

The liability for payment of service tax is on the owners who transfer land to others. DLF did not discharge its service tax liability on the consideration received towards transfer of the development rights of its land, they said.

When contacted by PTI, DLF denied any charge of service tax evasion by it and any of its group companies.

"We will like to deny any charges of evasion of service tax by any group company. The matter of development rights has been under discussion with the tax authorities because development rights are a part of an immovable property and hence not subject to service tax.

"We adhere to the highest standards of compliance in all tax matters and are hopeful of an early and satisfactory resolution of this issue with them," a DLF spokesperson said.

During the course of investigation, tax officials also found that DLF has entered into an arrangement with various land-owning companies, which are its subsidiaries, for transfer of development rights by them to it, the sources said.

DLF has also made payment to such companies for the same.

However, these land-owning subsidiaries of DLF are neither registered under the service tax laws nor have they discharged their service tax liability on the transfer of development rights to it, the sources added.

DGCEI officials have also visited the offices of DLF in this regard, they said.

The alleged service tax evasion by DLF and its subsidiaries is to the tune of about Rs 30 crore. DLF has voluntary deposited Rs 5 crore towards the service tax liability, they said.

Further investigation in the case is going on, the sources added.

Source:http://zeenews.india.com/business/realestate/latest-news/dlf-under-scanner-for-alleged-service-tax-evasion_109126.html