Evasion of service tax by companies is rampant across the country and the selection of K.P. Ajayakumar, an intelligence officer in the Central Excise here—who specialises in detecting service tax evasion by non-banking financial companies (NBFC)—for the Presidential appreciation underscores this.
Mr. Ajayakumar has, in the past couple of years, detected service tax evasion of about Rs. 300 crore. Of this, more than Rs. 120 crore was by NBFCs alone. One leading Kerala-based finance company was found to have evaded service tax of close to Rs. 15 crore by using securitisation. The company had ‘sold’ thousands of its gold loans to a private-sector bank through the process of securitisation. However, the NBFC, on behalf of the bank, itself administered the loans (like receiving principal and interests) for a huge fee. But, the company had not paid the huge service tax on these services.
Another company, which has a network of offices in the country with 1,300 employees, had floated a recruiting arm for supplying manpower. Through this arrangement, the parent company could evade payment of Employees Provident Fund and ESI contributions on behalf of the employees as it claimed that was hiring staff from a separate company. However, Mr. Ajayakumar detected that the recruitment company had not paid any service tax. Since the company was forced to pay the service tax, the parent company opted to wind up the recruitment arm and is now regularly paying the EPF and ESI contributions.
Mr. Ajayakumar, 42, who hails from Vadakkancherry in Thrissur district, was selected for the Presidential appreciation for ‘specially distinguished record of service’ on Republic Day for detecting extensive service tax evasion, by far the largest by an individual officer in Kerala.
Originally an inspector in the Central Excise commissionerate, Kozhiokde, Mr. Ajayakumar is now an intelligence officer at Kochi assistant director’s office in the Directorate General of Central Excise Intelligence.