KFC slapped Rs 40 lakh fine for VAT evasion

Aman Sood

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Tribune News Service

Patiala, June 24

Outlets of Kentucky Fried Chicken (KFC) in Punjab are under the scanner after the Excise and Taxation Department detected value added tax (VAT) evasion worth lakhs of rupees.

The department has slapped a recovery notice on the brand owner, AN Traders Food Products, in the state. It had also sealed the taxpayer identification number (TIN) of the owner, but released the same after the firm assured to deposit the tax money.

Officials told The Tribune that KFC avoided depositing VAT worth Rs2.56 crore in 2014-15 despite collecting the same from the customers. “In 2014-15, all 12 outlets of KFC in the state collected Rs4.82 crore, but deposited only Rs2.26 crore with the department, evading Rs2.56 crore,” said a senior official.

The popular fried chicken chain has outlets in Ludhiana (3), Khanna (1), Patiala (1), Jalandhar (2), Amritsar (1), Kharar (1), Bathinda (1), Zirakpur (1) and Mohali (1). All outlets are now under scrutiny. Official sources said the tax evasion came to light when a Jalandhar-based official got a tip-off about the same.

Anurag Verma, Excise and Taxation Commissioner, Punjab, told The Tribune that besides issuing a recovery notice, they had to seal the TIN number of KFC to ensure compliance. “The firm then faced problems in getting raw material from outside Punjab as goods are allowed only through a valid TIN,” he said, adding that other fast food outlets in the state were also under the scanner.

Verma said they had levied a default penalty interest of Rs40 lakh on KFC outlets registered in the name of AN Traders Food Products, owned by Ashok Sharma.

“While KFC paid Rs1 crore last week, postdated cheques of the pending amount have been accepted with an assurance that the firm would deposit the remaining amount at the earliest,” he said, claiming that the past records for VAT collected by KFC outlets and the amount deposited with the department was also been verified.

Ashok Sharma claimed they had not evaded any tax, but could not deposit the full amount due to some technical error. “We have already agreed to pay the fine and the matter has been resolved,” Sharma stated.