Firm part of PM's LS poll campaign under service tax scanner

A firm, which managed Prime Minister Narendra Modi's hugely successful Lok Sabha campaign, has come under the scanner of revenue authorities for alleged service tax evasion.

Summons has been issued by Directorate General of Central Excise Intelligence's Nashik branch to office bearers of citizens for accountable governance for allegedly evading service tax, official sources said on Tuesday.

It is alleged that the firm provided consultancy services since its inception in July 2013 but did not fulfil its tax liabilities, they said. It has been asked to give details of amounts received since 2013 and its service tax obligations, the sources said.

Political strategist Prashant Kishor was said to have been associated with the firm for some time and provided consultancy services for the prime minister's campaign ahead of the elections, they said.

An email to CAG for comments did not yield any response.

Calls and text message to Kishor also did not elicit any comment.

Sources said the firm has stopped working and it has not been filing mandatory returns under the companies act with the authorities concerned for past some time.

"It is a routine enquiry. Summons have been sent to the CAG and statement of few persons have also been recorded in the case. Further investigation is in progress," a source said.

The CAG earned about Rs six crore from consultancy services provided by it during the past about three years and the service tax liability could be in a few lakhs, the sources said.

The firm is contesting the department's investigation, saying it is a charitable organisation and exempted from service tax liability, they said.

"Citizens for Accountable Governance is a not-for-profit organisation registered under Section 25 of the Companies Act (1956). We aim to build a substantive and purposeful engagement with various establishments in the country and engage the youth in a movement to further strengthen accountable governance in India," reads the description on its website.

The section deals with the power to dispense with "Limited" in name of a charitable or other company.