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Home--News
Coca-Cola Issued Notice for Tax Evasion
Daily News and Analysis India
June 2, 2008
NEW DELHI: Soft drinks major Coca Cola India, German airline Lufthansa
and seven other companies have been slapped notices by authorities
demanding service tax amounting to Rs 77 crore.
The Anti-Evasion Wing of the Commissionerate of Service Tax issued
notices on Coca Cola India and German airline Lufthansa for evasion
of service tax totalling around Rs 15 crore.
Construction company Era Infra Engineering Ltd has also been issued
notice demanding Rs 35 crore on tax.
According to notices, while Coca Cola is alleged to have evaded Rs
8.55 crore [approx. US$ 2.1 million] for a period between April, 2003 and April, 2007, Lufthansa
is accused of not paying tax of Rs 6.16 crore from May, 2006 to September,
2007, .
Era Engineering Ltd's tax liabilities are for a period between 2004
and 2007. Coca Cola was issued a demand notice on non-payment of service
tax on the "out of pocket expenses," the service tax commissionerate
said.
Out of pocket expenses include spending over and above the contract
amount, which is not inclusive of reimbursements for labour and machinery
supplied while providing consultancy or other services.
Similarly, German carrier Lufthansa has been issued demand notice
for evading service tax on the full value of fare received by the
airline.
According to the service tax commissionerate, Lufthansa had not paid
service tax on the full fare received in the category, "passenger
embarking by air in India for international journey in a class other
than economy class."
An official handling the case told PTI that the total fare for a passenger
to travel by air is divided into about five to 10 categories by airlines
where the basic fare is just a small part of the total fare value.
Evasion generally takes place when an airline only pays service tax
on the basic fare and not the entire amount received, the official
said.
On the demand for Rs 35 crore on construction company Era Infra Engineering
Ltd by the wing, the department said the company was wrongly availing
benefit of abatement as it had not included the value of free supplies
material.
The Anti Evasion Wing has recovered about Rs 12.86 crore in the last
month, the department said.
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