CAG in CTU wheel: Those who did not travel in AC buses paid for those who did
The CAG report, a copy of which is with The Indian Express, stated that the “Chandigarh Transport Undertaking failed to collect a service tax of 6% on transport in AC buses, which came out to be around Rs 6 crore”.
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The CAG report, a copy of which is with The Indian Express, stated that the “Chandigarh Transport Undertaking failed to collect a service tax of 6% on transport in AC buses, which came out to be around Rs 6 crore”. (File Photo) Those passengers who did not even travel in AC buses in Chandigarh had to pay an increased amount of fare — (of travelling in AC buses) — only because the Chandigarh Transport Undertaking (CTU) failed to recover the tax from passengers who travelled in AC buses. For its own failure, it put the entire burden on passengers who did not even avail themselves the facility of the AC buses.
This was detected by the Comptroller and Auditor General (CAG) when they conducted an audit of the CTU records from 2017 to 2020.
The CAG report, a copy of which is with The Indian Express, stated that the “Chandigarh Transport Undertaking failed to collect a service tax of 6% on transport in AC buses, which came out to be around Rs 6 crore”.
After being pointed out its failure to do so, the CTU paid on its own initially and then later increased the bus fare of the passengers and put the burden on them to recover the amount as pointed out by the audit.
The CTU was liable to charge service tax at 6 per cent on transport of passengers by stage carriage air- conditioned buses with effect from June 1, 2016, till June 30, 2017 and GST on services with effect from July 1, 2017 at the rate of 5 per cent to pay the service tax/GST so collected from the passengers to the government account.
“Failure of the CTU to implement the relevant tax enactments from the prescribed dates and the consequent non-collection of the service tax/GST from the passengers of Stage Carriage air-conditioned buses resulted in avoidable payment of Rs 5.89 crore from the government exchequer. The department failed to implement the statutory requirement of collection of service tax and GST from the users of services and instead paid it from the government exchequer,” the audit noted.
It was further specified “the department stated that Rs 5.53 crore paid as service tax was being recovered from passengers with effect from January 16, 2020 by way of increase in the bus fare, daily and monthly passes with concessional tickets. The action of the department was not acceptable as it had imposed a tax burden even on those who never travelled in AC buses and had also collected tax of previous years from passengers other than those who actually availed the services”.
The CAG’s observations mentioned, “As per Section 66D of the Finance Act, 1994, services by way of transportation of passengers by a stage carriage was under negative list of services and not leviable to service tax. On June 1, 2016, Section 66D was amended and Service Tax was levied @ 6% on transportation of passengers by way of stage carriage AC buses. On July 1, 2017, GST of five percent was to be levied.”
However, “CTU failed to collect service tax/GST from passengers till January 2020. And then CTU deposited Rs 5.89 cr from government exchequer”.
When asked, CTU replied “that service tax was being recovered from the passengers with effect from January 16, 2020 by way of increase in the bus fare, daily and monthly passes and concessional tickets,” which the audit terms “not acceptable”.
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