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At a time when Baba Ramdev has embarked on a collision course with the Congress-led UPA government, tax sleuths are tightening the noose around the yoga guru.

A note prepared by the Directorate General of Central Excise Intelligence (DGCEI) in July 2012 charges Ramdev’s Patanjali Yog Peeth Trust (PYPT) at Haridwar in Uttarakhand as well as other organisations linked with him with financial irregularities.

The DGCEI conducted a special audit and identified six major areas of investigation, the first being the overriding powers Ramdev has been accorded in the trust deed of PYPT. Also under the scanner is the "donation", ranging from Rs.11,000 to Rs.11 lakh, received by the trust from corporate members for services rendered through yoga camps. This, the DGCEI noted, was in the nature of fees and not donation.

The tax sleuths have also called into question the huge tract of land the PYPT possesses on the basis of unregistered documents, the trust’s activities outside India - being carried out without obtaining any general or special order from the Central Board of Direct Taxes, and its "illegal activity".

The DGCEI also observed that while the Vanprastha Scheme applicants paid money to enjoy lifelong residence in cottages, the amounts shelled out did not qualify as donations because they were received in exchange for services rendered.

The primary focus of the special audit was on how money was being received by both PYPT and Divya Yog Mandir Trust (DYMT) to enable entities and individuals to participate in various schemes.

According to the authority, showing these amounts as donations was a direct evasion of service tax.

The note also disclosed that a showcause notice had been issued to PYPT by the additional director general, Delhi zonal unit, on April 24, 2012. It demanded service tax totalling Rs.4.94 crore for the period from October 1, 2006, to March 31, 2011. The document stated that the case was pending adjudication with Meerut’s central excise commissioner.

It added: "The investigation revealed that PYPT is charging fees from participants in the name of donations wherein they send donation coupons printed by them to be sold at the local level. All the proceeds received from donation coupons are repatriated to PYPT. But the services provided by them are covered under ’health and fitness services’, which are defined under section 65(51) and attract service tax under section 65(105) (zw) of the Finance Act, 1994. "DYMT was also put in the dock for earning rent from immovable property but not paying service tax. The audit note said, "(It was only) after the initiation of the inquiry (that) they obtained registration and deposited service tax amounting to Rs.19.78 lakh along with interest."