AR Rahman Tax Evasion Update: GST Commissioner Says Service Tax Demand and Penalty Levied Based On Evidence

Goods and Services Tax (GST) and Central Excise official (Chennai South) has reiterated that the music composer A R Rahman was issued a demand notice towards arrears of Rs. 6.79 Crore service tax and penalized for another Rs. 6.79 Crore only based on evidence.

The Commissioner of Goods and Services Tax (GST) and Central Excise, in a counter-affidavit filed before the Madras High Court recently, denied the allegation that levying the service tax and penalising the composer was not an attempt to tarnish his image, according to a report in The Hindu.

In October 2019, AR Rahman was issued notices of evading payment of service tax of Rs. 6.79 Crore between April 2013 and June 2017 and was also penalized to a tune of Rs 6.79 Crore by the tax officials.

Later, in February 2020, Rahman filed a writ petition challenging the tax demand with the Madras High Court which granted an interim stay on the proceedings by the tax officials.

The Commissioner claimed that he had demanded the arrears of service tax and imposed a penalty only after being convinced that the entire bouquet of services offered by Rahman to the film producers was liable to be taxed and proceedings were initiated based on intelligence gathered by the Directorate-General of GST Intelligence.

Instead of just sharing the musical notations with the film producers the composer composed the music and recorded it by engaging the services of lyricists, singers, instrumentalists, and technicians and all such activities constitute a service defined under Section 65B (44) read with Section 65B (51) of the Finance Act of 1994 according to which one is liable to pay service tax, the counter-affidavit filed by the Commissioner stated.

The tax official requested the court to vacate the interim stay on the proceedings granted in February 2022.