Blue star, refrigerator and air conditioner manufacturer was charged with INR 135.72 crore service taxes. Principal Commissioner of service tax-, Kolkata sent an order to the company regarding the short payment of service tax summing up to 67.86 crore and penalty over this amount. The taxation period is from financial year 2007 to 2012. The penalty of 67 crore was imposed under section 78 of the finance act, 1994. Along with this the interest is calculated according to section 75 of the finance act, 1994. Blue star, however disagreed to the tax levied on them and will challenge the order in an appropriate forum. The company quoted the order as “patently erroneous” following advice from its tax advisors.
The company stated that it faced a similar order in another jurisdiction consequently the case was dismissed and the ruling was in favor of Blue star.This comes at a time when the government has been trying to reduce its fiscal deficit and has been conducting stringent tax raids. The finance ministry in a bid to raise its revenue with less amount of hassle has also given tax amnesty period.In the given tax amnesty period the tax defaulters can pay their due amounts of previous financial years without any further action from the government. The state is also probing willful tax evaders and the disproportionate agricultural incomes.According to recent RTI and PIL filled following it, reveals that several crores of money is being declared as farm income to evade tax.