Prasar Bharati has appealed with the Service Tax Department Tribunal (CESTAT) for recovery of Rs 1.6028 billion deposited because of a ‘gross calculation error’.

Prasar Bharati sources told indiantelevision.com that the pubcaster had claimed that the demand raised was erroneous, but the Service Tax office had issued a final demand notice on 5 May last year which included a demand of Rs 871 million issued to it in May 2009, with interest and penalty under Section 78. This led to the pubcaster depositing the sum of Rs 1.6028 billion.

A demand notice had been received in May 2009 from the Service Tax Department in respect of service tax liabilities relating to the years 2003-2007-08. This ha stated an unpaid amount of Rs 871 million.

The Member (Finance) A K Jain had in 2011 pointed out this gross error in a letter to Information and Broadcasting Minister Ambika Soni.

The sources said due to systemic deficiencies within the organisation prior to 2007-08, regular returns in respect of Service Tax collected were not being filed. As a result, the Service Tax Department raised the demand based on income and expenditure figures in the published accounts without taking into account the benefit of Cenvat Credit admissible to the pubcaster, which was not claimed due to these deficiencies.

Non-receipt of data from field offices and deficiencies in collection of accurate data have been identified as the main reasons for the flaw. The problem was compounded by lack of trained accounts staff and the pubcaster has now appointed a chartered accountants firm.

Returns are now being filed regularly, and the pubcaster has paid a sum of over Rs 4 billion (Rs 4,653,297,477) including about Rs 500 million (Rs 499,011,611) in CENVAT and the rest in cash for the years 2008 to 2012.

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