MUMBAI, FEB 21, 2014: EVEN as the Ministry of Health today released the quantum of compensation paid to victims of clinical trials in India by noted companies like Fortis and Reliance Life Sciences, the Mumbai Service Tax Commissionerate-1 today arrested the MD of M/s Ashco Niulab Industries Ltd on the alleged charge of service tax evasion.

The accused company is engaged in providing Clinical Testing and Trial Services for newly developed drugs and vaccines on human trial. They have been collecting Service Tax from their clients but were not depositing the same with the Government Exchequer. As per the Press Statement released by the Commissioner, Mr Sushil Solanki, they had collected Service Tax from April 2007 onwards, but had not paid to the Department. Total amount of Service Tax not paid from April 2007 to September, 2013 is Rs. 4.64 Crore. There would be further liability from October, 2013 onwards, which is under investigations. The company has its activity office at Andheri (East) and NOIDA. Department has already attached its NOIDA office for recovering of Service Tax dues.

As per the Commissioner of Service Tax, the Managing Director of the company was allegedly involved in the day to day operations of the company and was fully aware of the service tax liability of the company. The MD of the company was advised by the Service Tax officials to pay the service tax collected by them, however they continued to collect the Service tax but did not deposit the same. When the Department came to know about the continued Service tax evasion by them, department immediately took strict action and arrested the Managing Director of the Company yesterday.

The action taken by the Department is in line with Government policy of Zero tolerance against the Service Tax evaders. The Government had recently come out with VCES Scheme but the tax evaders are not coming clean, therefore now, serious action will be taken. Recently the Service Tax department had arrested a senior person of M/s Honest Security Service; the Director of M/s Talwalkars Fitness Solution Pvt.Ltd and a senior functionary of M/s. Orbit Enterprises, a builder company for their role in huge amount of service tax evasion.