Central Excise Deptt.asks BJP to Pay service tax on Modi rally tickets

In a curious notice to BJP, the Central Excise Department has demanded payment of service tax by BJP on tickets for entry to its Prime Ministerial candidate Narendra Modi’s rallies.

Directorate General of Central Excise Intelligence (DGCEI), Ludhiana wing, has shot off a letter to BJP’s Chandigarh unit six days ago stating that the party should intimate about the details of amounts collected and service tax paid, if any, in regard to entry tickets to various rallies organised in the region after July one, 2012.

It said neither the party nor Modi was registered under service tax and no service tax has been paid on collection from tickets.

It said “as the entry tickets to theevent were not for any admission to entertainment event or access to amusement facilities (which are in the negative list), the same is taxable in the hands of person collecting the amount on tickets”.

BJP reacted sharply saying the UPA government “has now invented a new curious method”, which it hopes can tackle Modi.

“Absurd that it may sound, they now propose to tax Modi’s rallies. Considering the mammoth crowds who gather to listen to Narendra Modi all over the country, this can be Finance Minister’s faint hope of augmenting his otherwise depleting revenue,” BJP leader Arun jaitley reacted on his blog.

The DGCEI, in its letter had cited media reports claiming that money was being charged to people who attended the rallies of Modi. The department, which comes under Finance Ministry, took cognizance and raised a demand about the non-payment of service tax.

The department cited section 14 of the Central Excise Act, 1944, for raising the demand. Under this Act, the department has the power to summon persons to give evidence and produce documents in inquiries being conducted under its provisions.

Jaitley said while there were no tickets for Modi’s rallies, the BJP has launched a massive fund collection campaign and its cadre collected it either at rallies or elsewhere in the country.

“Our effort is to reach 10 crore households for fund collection,” he said and asked whether such notice for collecting funds is only being issued to the BJP or to other political parties, particularly the Congress Party.