Central Excise goes after Bollywood, arrests director

MUMBAI: The Central Excise department in Mumbai has gone after Bollywood in a big way, trying to recover service tax from actors, directors, writers and others associated with the film industry as well as production houses.

The department has served notices on 132 Mumbai-based film production houses for recovery of service tax, besides shooting off letters to 36 actors who haven't paid their taxes on time. Reputed director Samir Karnik has been arrested for failing to pay service tax.

Samir Wankhede, Deputy Commissioner of Central Excise, told ET that the department has opened a new drive to recover taxes, which could run to over Rs 100 crore.
Some Bollywood stars including Amitabh Bachchan, Priyanka Chopra have already paid their share of the tax. But many are either not aware or have not paid up despite getting registered with the department earlier.

"Directors Anurag Kashyap and Tigmanshu Dhulia are two prominent Bollywood personalities who have defaulted on tax payments, and have been served notices. We have appealed to all that they should pay 12.3% service tax after receiving the notices. Those who don't comply will face serious legal action," Wankhede said.

"If the service tax liability is over Rs 50 lakh and it has not been paid for a period of six months since the transactions have taken place, then it becomes a non-bailable offence. In such a case, individuals may be arrested," Wankhede added.

Under the special drive initiated by the central excise authorities, film director Samir Karnik and a businessman Victor Bedi have been arrested recently. "We introduced a voluntary compliance scheme but it has generated limited response. So, now we have taken up this drive," Wankhede said.

"The films or programmes for which copyrights or satellite rights have been sold between July 2010 and July 2012 attracts a service tax of 12.3%, then from July 2012 to June 2013 there was an exemption on this. But since July 2013, service tax has again been imposed. So, production houses and film producers have to pay service tax on rights sold between 2010 and 2102," Wankhede explained.

According to the Finance Act, from July 2013, artists and technicians working in film and entertainment industry come under the service tax net. Actors, directors, writers, cinematographers and other technicians have to register with the excise department and pay 12.3% service tax on their earnings.