BCC slaps Rs 7Cr penalty on firm over tax evasion

Belagavi: Belagavi City Corporation (BCC) has levied a tax penalty of Rs 7,08,66,578 on Vega Funmobile Private Limited for alleged tax evasion and serious violations in building construction norms.
According to BCC sources, the penalty was imposed based on discrepancies between the actual built-up area and the area declared for property tax assessment, and also in view of the fact that it continued to pay taxes under the commercial slab though its operations fell under the industrial category .
The company reportedly admitted to the violations during proceedings, prompting action under Section 112(C) of the Karnataka Municipal Corporations Act, 1976.
Shubha B, the BCC commissioner, passed the order, following three hearings on Jan 31, April 15, and April 21, 2025.
In keeping with the Municipal Act, the company must deposit 50% of the penalty amount before appealing to the BCC standing committee on taxation.
"The tax was calculated after deducting previously paid tax amounts," Shubha told TOI.
"The 24,000 sq ft structure is entirely unauthorised, constructed without a valid building permit. Despite this, the company has been paying tax since 2004, using the self-assessment scheme, which lacked verification," the officer said.
Shubha added that Vega Funmobile had entered a memorandum of understanding (MoU) with BEMCO Company for leasing the land in August 2002. Initially, in 2002-03, the company had paid taxes, declaring the land as vacant. Though building permission was granted in Dec 2003, there was no construction in 2004-05. Even then, building tax was paid under the commercial slab, even though the usage fell under the industrial category.
The commissioner initiated a detailed inquiry upon detecting these discrepancies.
Following the hearings, an order dated April 25 directed the company to remit the full tax and penalty amount to BCC.