HYDERABAD: Mahesh Babu’s legal team on Friday hit out at the GST Commissionerate for freezing two of his bank accounts without prior notice in connection with a 2007 service tax evasion case, despite the dispute being pending before the High Court.
“Mahesh Babu is a law-abiding citizen complying with all fiscal legislations and has no undisputed tax payable,” a release by the team said.
Officials on Thursday attached the actor’s Axis Bank Jubilee Hills branch account and recovered Rs 42.9 lakh. They also froze his ICICI Bank account having a balance of Rs 1 crore in order to recover another Rs 31 lakh towards a total tax due of Rs 73.5 lakh.
Mahesh owed the government Rs 18.5 lakh in service tax dues in 2007-08. The sum, along with interest and penalty now amounts to Rs 73.5 lakh. No cash can be withdrawn by the actor from the ICICI Bank account until Rs 31 lakh is credited to the government.
The GST Commissionerate maintained the actor failed to pay service tax for the remuneration he received as brand ambassador for various products and ads in 2007-08. The actor’s legal team on Friday said “the brand ambassador services was brought in the statute by insertion of Section 65(105) in the Finance Act 1994 with effect from 1-7-2010, and so services rendered in FY 2007-08 are not taxable”.
GST Commissionerate officials retaliated saying “the contention of the tax payee has not been agreed to by one original quasi judicial, the first stage of Appellate Authority ie., Commissioner (Appeals) and second stage of Appellate Authority i.e., the Central Excise Service Tax Appellate Tribunal (CESTAT) in June 2018. In fact, both the authorities directed G Mahesh Babu to pay the entire tax amount, non compliance of which led to dismissal of his appeals and even the third stage of Appellate Authority i.e., High Court, before which he filed writ petition in September 2018, has not stayed operation of CESTAT order till date”.
The actor was issued a notice in 2010 and the original adjudicating authority’s order was issued in 2012. After dismissal of appeals before Commissioner (Appeals) and CESTAT, the actor had filed an appeal before the Hyderabad High Court seeking a stay order and relief in September 2018. The matter, however, is pending before the court even today.
Officials said therefore “the Commissionerate is well within its powers to recover the government’s dues under Section 87 of the Finance Act 1994, the provisions of which have since been invoked on 27.12.2018.