Net4India chief Jasjit Sawhney detained as company did not pay service tax in time, granted conditional bail

2 Sep, 2013

Jasjit Singh Sawhney, CMD of Net4India, a leading network and application services provider (listed on both NSE and BSE), had been detained by the Service Tax Department on the charge of not remitting the levy collected to the department (basically service tax collected but not deposited with the government), according to a Business Line report.

Arrested on Friday night (August 30, 2013), Sawhney was granted conditional bail till September  3 after a payment of Rs 25 lakh. He has also been asked to pay Rs 75 lakh within 15 days, post which he has to pay an additional Rs 1 crore within a month."We apprehend that a much larger part of the Rs 9 crore pending liability for 2012-13 is involved in this case. It could be Rs 6-7 crore," a senior service tax department official told Business Line. "A chunk of the total liability was collected by the company from its clients as service tax to be paid to the exchequer, but was not deposited."

The department had received information about the same in February this year and, at the time, had asked Sawhney to deposit the amount. While he gave an undertaking for the same, Sawhney failed to comply.

Net4India has now issued a statement to BSE that reads, "Sawhney, in his capacity as MD, was detained, since the company had not deposited the service tax before the due date as stipulated in the finance act; however, we have already given a schedule for payment of dues outstanding against the service tax to the department which they have agreed for. The company had also submitted the scheduled liability of service tax and the repayment schedule in respect thereof of the concerned court."

Last month, Rajesh Agarwal, co-founder of Gurgaon-based mobile handset firm Micromax Informatics Ltd, and Manish Tuli, a senior official of the company, had been arrested by the Central Bureau of Investigation (CBI) on alleged graft charges. CBI issued an official release regarding the matter, but it refrained from naming Agarwal and Tuli. Instead, they had been mentioned as 'owner and partner' of a Gurgaon-based private firm.

At the time, we had contacted the company for a confirmation on the same and got this official response, "Rajesh Agarwal, co-founder, Micromax, has stepped down from his duties and recused himself from the responsibilities. He will focus on the legal proceedings to clear his name of the alleged charges. Following the media reports that owners of Micromax have been arrested by CBI, the company clarifies that Tuli has no association with Micromax and Agarwal was present in his personal capacity with Tuli."

In July, Sandeep Aggarwal, co-founder and CEO of Gurgaon-based Clues Network Pvt Ltd, the startup that runs the horizontal e-commerce marketplace, was arrested by the Federal Bureau of Investigation (FBI) on insider trading charges. ShopClues is also a VC-backed company and has Helion Venture Partners, Nexus Partners and, a Japanese business group based in Tokyo, as its investors.

Post that, the company issued a release clarifying that the case involving Aggarwal was related to events that occurred prior to ShopClues' inception and therefore does not involve the business of ShopClues.

(Edited by Joby Puthuparampil Johnson)