BGR Energy booked for R107-cr tax evasion

Written by fe Bureau | Chennai | Updated: Oct 29 2011, 07:39am hrs
The Directorate General of Central Excise Intelligence (DGCEI) has booked a case of evasion of service tax to the tune of R107 crore against Chennai-based BGR Energy Systems India, a key player in building thermal power plants in the country.

The company has been slapped with a show cause notice by the DGCEI, estimating a short-payment of close to R107 crore over the past five years. When contacted, Easwar Kumar, CFO, BGR Energy said, The company has received a show cause notice from DGCEI by wrongly combining the supply portion of the 12 contracts under review with service portion. We have already paid the tax applicable for the service portion and the company is confident that supply portion doesnt come under the service tax purview. The company has 30 days time to reply to the show cause notice.

According to a DGCEI statement, BGR Energy is alleged to have suppressed the full value of the works contracts services rendered by them to state and private electricity generating bodies. An investigation was undertaken covering 12 mega thermal power projects of BGR including those in Mettur and Valuthur in Tamil Nadu, Vijayawada, Kakaitya, Kothagudem and Krishnapatnam in Andhra Pradesh, Chandrapur and Khaperkheda in Maharashtra, Kalisindh in Rajasthan, Marwah in Chattisgarh and electricity sub station projects in Bangalore rural district. Subsequently, BGR has been accused of deliberate suppression of taxable value with an intention to evade service tax, the statement said.

BGR Energy had bagged a R3600-crore NTPC order in September for supply of supercrtical steam turbine and generator. The company had partnered with Hitachi of Japan for supercrtical steam turbines and Hitachi Power Europe, Germany for supercritical boilers and was in the process of setting up two manufacturing facilities in Tamil Nadu with a capital investment of R4,400 crore. The manufacturing facilities being created in Tamil Nadu were meant to be the global manufacturing centre for Hitachi, Japan.