CWG scam: Finance Ministry to issue tax demand notices to firms

New Delhi: The Finance Ministry is likely to issue service tax demand notices to some private companies, who carried out 2010 Commonwealth Games related projects here, after a Central Vigilance Commission (CVC) probe detected evasion by them.

At least 37 government departments have spent over Rs 13,000 crore in 9,000 publicly funded CWG related projects. The CVC, which is looking into the complaints of alleged corruption in the Games related works, has detected tax evasion of about Rs 1,000 crore in execution of these projects, official sources said.

[caption id=“attachment_1117479” align=“alignleft” width=“380”]  Suresh Kalmadi. AFP. [/caption]

The firms and some individuals will soon be issued tax demand notices by the Finance Ministry, they said.

The notices demanding at least Rs 240 crore have already been issued by the Ministry and a recovery of about Rs 67.33 crore has been effected from them, the sources said. The probity watchdog is also collaborating with labour department to ensure recovery of crores of rupees allegedly evaded on account of workers welfare cess, a levy on the cost of construction incurred by employers, they said.

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As many as Rs 41.80 crore as workers welfare cess has already been recovered by the labour department from private companies. Officials dealing with the probe said the Finance Ministry may also issue income tax demand notices to the individuals or firms.

The CVC is also coordinating with other departments to ensure whether or not contractors, private firms and government departments, who had carried out CWG projects, had paid their statutory tax obligations, the sources said.

The CVC had detected huge tax evasion by certain private entities while executing works for the sporting extravaganza held here in October 3-14, 2010. The CVC had received a number of complaints questioning the quality of works executed and justifiability about the cost escalations.

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Some of these complaints were directly inquired by the Commission and others were referred to CBI and Chief Vigilance Officers (CVOs)– who act as distant arm of CVC– concerned for investigation, keeping in view the seriousness of the allegations levelled in the complaints.

Based on references from the CVC and other agencies, the CBI has also registered about 20 FIRs and preliminary inquiries.

The Commonwealth Games were mired in alleged corruption in several projects executed by government and private organisations. Prime Minister Manmohanh Singh had also announced a High Level Committee (HLC) to look into the allegations of corruption.

Six reports submitted by the HLC are being examined by a Group of Ministers headed by Defence Minister A K Antony.

PTI