SRA authorized the manufacturer to use PAP units, evaded service tax: report

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Central Excise claims 250 crore overdue service tax for HDIL project, issues warrant notice

Mumbai: Central tax agencies claimed that the Slum Rehabilitation Authority (SRA) authorized commercial gains to a developer and evaded taxes in the amount of 250 crore. A report by the Directorate General Central Excise Intelligence (DGCEI) affirmed that the decision of the SRA to authorize the real estate major HDIL to use on a private basis 1,286 residential dwellings in a Kurla project, intended for people affected by the project (PAP ), cost the state government ₹ 37.29 crore in notional rent over five years.

The report also alleges that the SRA “deliberately failed to pay a service tax with an ulterior motive to evade payment” in violation of Articles 67, 68, 69 and 70 of the 1970 Finance Law. A show cause notice issued this month to SRA by Alok Chopra, Deputy Director General, DGCEI requested an explanation within 30 days, failing which the case will be adjudicated. ex part based on the findings of the report.

Named Premier, the SRA project in Bharat Nagar, Kurla was developed on plots with CTS (city survey number) 637 to 637/87. It includes 17,347 residential units for the rehabilitation of PAPs, 159 balwadis, 159 company offices and other amenities. According to the project’s Letter of Intent (LoI), all these were to be handed over to SRA upon completion, and 1,286 residential units and 50 commercial units to SRA and MMRDA.

The justification notice from the DGCEI states that these were used by HDIL for a transit camp and to move PAP for commercial and commercial purposes. “The SRA did not bother to explain the income and taxes involving these units, which were not voluntarily and deliberately handed over by the M / s HDIL as of 9/11.”

The investigation revealed that HDIL had retained the units solely on the basis of a “verbal and mutual” agreement with the SRA. “When we sent a summons to the financial controller, SRA, about this, they did not show up,” the report said. The SRA subsequently paid 56 lakh in tax on the transaction with HDIL, but did not pay the same on the units claimed by HDIL for its use, she points out.

The DGCEI report states that the SRA issued a notice to recover only 2.83 crore of rent over five years for 50 business units after repeated requests for a service tax on the transaction by the tax authorities. The service tax on the construction of more than 1,200 residential units was not paid, and the SRA did not say whether the unpaid rent had been recovered from HDIL. Former SRA CEO Aseem Gupta said: “Before leaving office, all invoices were sent to the developer. I don’t know if this was followed after June 2016 when the new CEO took over.

Investigators’ calculations show that the rent for the roughly 1,000 units would have been 37.39 yen crore for five years and would have been subject to a service tax of 4.79 yen crore at 14.5%. This amount, says the report, is unpaid.

In total, the SRA raised 1,900 crore under various heads of private and semi-governmental organizations. The report claims that a service tax of 251 crore was applied on the amount collected, but SRA did not pay despite its business activity such as renting real estate, renting land and imposing a tax. land premium. “Said activities are not of the nature of statutory activities, therefore the fees charged and collected from manufacturers on these transactions are subject to service tax,” the report said.

We handled it badly: SRA

While admitting that an agreement with HDIL to allow him to use the accommodation for private purposes was made but not recorded, nor in writing for that matter, SRA agents denied any wrongdoing. They said the case was “mismanaged” in a rush to accommodate those affected by the Sahar Elevated Road Project (PAP), which was under construction at the time by the Mumbai Metropolitan Region Development Authority ( MMRDA).

A senior SRA officer, who declined to be named, said: “HDIL did not want to pay rent and told us that MMRDA was committed to making housing free. It turned out that the MMRDA had not made this commitment. We were able to recover part of the outstanding amount from the promoter. There was no corruption.

Hari Prakash Pandey, vice president (finance), HDIL, said the company has yet to see the ICBD SRA notice of case.


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