Brings former tax officer to flesh out allegations
SIDHU RAISED ISSUE OF ALLEGED EVASION BY FASTWAY, PURPORTEDLY OWNED BY THE BADALS, AT A CABINET MEET ON WEDNESDAY I have asked my department to compile a list on the evasion. The officers sought two weeks’ time for it, but I have given them a week. NAVJOT SINGH SIDHU, local bodies minister
From page 01 CHANDIGARH: Punjab local bodies minister Navjot Singh Sidhu’s tirade against Fastway Transmissions, the company that came to enjoy monopoly over the cable TV business in the state during the Badal regime, continued on Thursday, after he found some support from chief minister Captain Amarinder Singh.
The cricketer-turned-politician held a press conference on Thursday to claim that the “scam” was much bigger if central taxes of “thousands of crores” too were taken into account.
Showing a letter written by him to chief commissioner for excise and service tax (now central goods and services tax) Manoranjan Kaur Virk, Sidhu said the department furnished “halfbaked” information.
COUNTERING CENTRAL VERSION
“The department sent Fastway over 1,100 recovery notices without invoking section 73(A) of the Finance Act, thus allowing local cable operators to go on appeal against the notices. The evasion of taxes is much bigger than it appears. From using electricity poles, to digging roads, manholes and railway overbridges, for laying underground cable, the company did it all at night, without paying charges to government departments,” he said.
“I have asked my department to compile a list on the evasion. The officers sought two weeks’ time for it, but I have given them a week. The scam, as we see it now, is just the tip of the iceberg,” Sidhu added.
Virk’s reply to Sidhu says an audit of Fastway and its 12 sister concerns resulted in 107 audit objections with total evasion of ~32 crore of service tax of which Rs 10 crore has been recovered.
“Show-cause notices for recovery of the remaining amount have been issued to the companies,” it says.
EXPLAINING THE EXTENT
But, a former officer of the central excise and central tax department, SL Goel, whom Sidhu brought with him for the media interaction, tried to puncture the claims of his former department.
He said service tax evasion alone adds up to ~2,300 crore. “Taking interest and penalty, it amounts to ~2,618 crore.”
“The service tax was collected by the cable operators but not deposited with the central department. Along with its 12 sister concerns, the company imported 43 lakh set-top boxes and availed refund of central value-added tax (CENVAT). But since it never refunded the security amounts on the boxes, it had to reverse the CENVAT, which it never did. It failed to reverse ~100 crore of CENVAT in the last five years, which attracts 100% penalty, thus another ~100 crore,” he added.
He also claimed that Fastway cancelled invoices worth ~36 crore after closure of financial year 2014-15, in May-June of 2015. “The tax liability and penalty on that add up to ~10 crore,” he said.
Trashing claims made by Fastway in newspaper advertisements released against Sidhu’s assertions, Goel said, “The company has admitted (in figures given to HT, too, in 2015) that 6,500 cable operators of the 8,000 in Punjab were working with it. There are nearly 13,000 villages in Punjab, and each village has TV connections. So the number of connections under Fastway is much larger than it agrees to.”
Sidhu underlined that the CM asked him to speak to AG Atul Nanda on the matter. “We are going after them (Fastway). The tax evasion story is going to only get bigger as we unearth the scam layer by layer, and thoko (slap) penalty on them.”
‘Fastway is in many states. Do I have political patronage everywhere?’
He is the man in the eye of the storm. Fastway managing director Gurdeep Singh comes from a family of transporters and joined the business in 1987. Now, his fleet of luxury buses and car carriers under Jhujhar Transport boasts of 450 vehicles. But it is his reported monopoly over cable television of Punjab under alleged patronage of Shiromani Akali Dal president Sukhbir Singh Badal that has kept him in the news. Excerpts from an interview:
By your admission to HT in 2015, 6,500 of 8,000 cable operators in Punjab are associated with Fastway. How do you now deny charges of monopoly?
The numbers have come down since. Presently 5,290 cable operators are associated with us in Punjab and 159 in Chandigarh. Some of the earlier ones have merged with others or gone to another multi-system operator, Hinduja Cable, which is a new player in Punjab. Then, some cable operators are aligned with other groups such as Bhullar Cable in Amritsar.
But you claim you have just 22.5 lakh TV connections with 6,500 cable operators and after importing 45 lakh settop boxes?
One local cable operator can have anywhere between 100 and 500 connections. There are other players in the market too, including direct-to-home in cities and towns. In villages, Doordarshan still is a dominant player. We have also entered the cable television markets of UP, Himachal Pradesh, J&K, Rajasthan, Uttarakhand and Haryana. So the set-top boxes were not just meant for Punjab. Around 1.5 lakh of those are lying in our godown and another 1.5 lakh are lying damaged. Our connections in Punjab and Chandigarh are 24.5 lakh, of an allIndia total of 42 lakh, of which 34 lakh are active.
What is the worth of your cable business now?
Our turnover is over Rs 500 crore now. We have expanded both the scale and area of our business. We have digitised the cable network business and ventured into the internet market too.
Minister Navjot Sidhu claims you evaded taxes of crores under the patronage of the Badal government. What’s your say?
A reputed company like Ernst and Young audits our accounts. Are we so naive that we will evade all state and central taxes? How will we apply for loans then? How will we raise funds through IPO (initial public offer)? This negative publicity is timed to scare bankers and investors as we are trying to raise capital from the open market. As for service tax, it is the individual liability of the cable operator to deposit it. We have deposited entertainment tax and charges for laying our cable or using electricity poles for overhead cable. We have spread our cable business to many states. Do we enjoy political patronage everywhere?
There are allegations that cable operators pay you in cash in your many bank accounts to evade taxes. Is your agreement with them not exploitative in nature?
We receive all our payments through cheques. There are no cash transactions. As for the agreement, it is drafted by the Telecom Regulatory Authority of India (TRAI). The considerations of the operator and the multi-system operator like us are as per TRAI agreement.
But has your cartel not prevented even big companies providing DTH services, such as Zee and Tata Sky, to make major inroads in Punjab?
No censorship but won’t allow cable monopoly: CM
WARNS OF ACTION ON FASTWAY, PTC NEWS IF FOUND GUILTY OF TAX VIOLATIONS; SAYS ANY OPERATOR, CHANNEL WELCOME IN PUNJAB
CHANDIGARH: Punjab chief minister Captain Amarinder Singh on Thursday ruled out any censorship against the Fastway cable network or PTC News channel, but adding a caveat that action will be taken against them if found guilty of tax violations.
In a statement issued here, the CM said his government was committed to provide a levelplaying field to TV channels and cable operators and that he would not indulge in vendetta politics.
“But whosoever is found guilty of any tax violations or any other action against the law of the land will be penalised,” the statement read.
Amarinder said he was committed to bring an end to the cable mafia in Punjab and will welcome any organisation to compete in a healthy environment.
“Let them all come and compete for the viewers’ attention. People will automatically reject any channel disseminating biased news or information,” he said. “It is in the interest of the people of Punjab to be exposed to multiple TV channels and they are mature enough to pick unbiased and neutral information.”
He said ending monopoly did not mean imposing censorship on any channel or shutting down the operations of a cable network.
The government, he said, would make sure people get the choice they deserve and are not forced to consume biased coverage dished out by some channel having monopoly. He said his government would extend all possible help to any new channels or cable operators seeking to set up shops in Punjab.