Nothing could be worse news for a Big 4 Consulting Company, known as Top Tax Advisor to MNCs; and which claims to have hired a team of over 10 dozen “great” Tax Experts on Compensation ranging upto Rs 2 Crore Per Annum; itself being booked by the Service Tax Department for allegedly evading service tax which is said to be in the range of around Rs 10 Crore on various taxable services provided by it. Though the Company is advising over 200 MNCs based in India; who have signed a global mandate for Tax Advisory Services at the rates ranging from Rs 5000/- to Rs 20000/- Per Hour; through its offices located at Delhi, Gurgaon, Mumbai, Kolkata, Chennai and Bangalore etc.; the Company is said to be seeking Consultancy from outside Experts as the stake and the reputation involved are high.
· Several IRS Officers have also recently resigned and joined the said Consulting Company as Tax Consultant and have been hired on Packages which are said to be in the Range of Rs 25 Lakh to Rs 50 Lakh Per Annum.
· The efforts were made by Allindiantaxes to contact Mr VK Garg ,Commissioner of Service Tax, Delhi to ascertain the exact nature of investigations and allegations against the Big 4 Consulting Company but he was reported to be on leave. Mrs Sandhya Baliga Commissioner of Central Excise Delhi-II who is temporarily holding the charge of Commissioner of Service Tax was also not available for her comments on the development.
· Further, no Press Release has yet been issued by CBEC on the issue though the Top Brass of Finance Ministry has already taken a serious note of the development according to sources and it is contemplating issue of instructions to keep all Big Consulting Companies under Service Tax scanner. According to CBEC several Companies providing merger and acquisition advisory services are liable to pay service tax under notified taxable service of “Business and Management Consultancy” whereas only few companies are said to have paid service tax under the said category claiming that they are not Business or Management Consultant and thus , are not liable to pay service tax. Further, Royalty payment by MNC Companies to their Parents is also under the watch of service tax.
· Some Companies have already started soul searching and are doing in-house deliberation to voluntarily pay service tax along with the interest of 13 per cent on services rendered by them and not paid by them, before the service tax department knocks at their door with search warrant. But service tax department is going to rake in a moolah after investigations as aggregate gross billing of Big Consulting Companies is said to be over Rs 500 Crore. The cost of compensation paid by the Companies to their 300 odd Partners itself is between Rs 50 lakh to Rs 2 Crore per Partner. Even if a small percentage of the gross billing of the Companies is subject to service tax; the Revenue is going to garner a handsome figure without engaging any Consultant.