HP blows the lid off GST evasion by the two Hospitality Chains;will other states follow????

Shalini Sharma

Excise and Taxation Department of Himachal Pradesh has unearthed a major Goods and Services Tax (GST) evasion episode in Dharamshala featuring two of the country’s top names in the hospitality industry.

The most interesting aspect of the evasion unearthed is that the phenomenon is expected to have mirror images across other states as well. If taken up by the central and state excise industry across the country, it can yield revenue worth crores for both the central and the state governments.

Officials say that in Dharamshala alone the tax calculated along with the interest and penalty amounts to Rs 11,327,782 for the first hotel chain and Rs 12,394,515 for the second one. Both these chains are functional across the country and host their clients in prime properties.

Assistant Commissioner of state’s Excise and Taxation Department Dharamshala, Rajive Sharma who has led the team that has unearthed the evasion told Himachalwire, “The point that needs to be understood here is that the head office of a certain hotel chain can be in any part of the country but it has to contribute tax under the GST at the place of service. This was not being done and we were able to trace this out.”

In this case while the hotel chains are paying the GST at their head offices but the ”place of service tax” is  not being paid at the  places where they were providing service to their customers.

Highlighting the gravity of the issue, Sharma said that, ”The revelations can upturn the revenue count in several states manifold.

If the authorities in other states and union territories examine this aspect, they can claim the taxes running into crores.

It is well known that Himachal earns its dominant share of revenue from the tourism industry. If the evasion by the two hotel chains in question is calculated for their ventures across the state, the government would be pocketing an additional revenue of at least Rs 10 crores.

The lid has been uncovered. It is now for the authorities in both Himachal and elsewhere to follow up the issue. Incidentally both the tourism as well as the excise and taxation portfolios in the state are with the Chief Minister Jai Ram Thakur. Himachal has an opportunity to set an example for the others to follow.

It is a known fact that both the tax payers as well as the collectors are still struggling with the lacunae related to the implementation of the GST across the country. The central government continues to bear the blame for its shoddy implementation. This is an opportunity to set the things right at least in the tourism sector.