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.

FAIR USE NOTICE. This document contains copyrighted material whose use has not been specifically authorized by the copyright owner. India Resource Center is making this article available in our efforts to advance the understanding of corporate accountability, human rights, labor rights, social and environmental justice issues. We believe that this constitutes a 'fair use' of the copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner.




Home | About | How to Use this Site | Sitemap | Privacy Policy

India Resource Center (IRC) is a project of Global Resistance -- "Building Global Links for Justice"
URL: http://www.IndiaResource.org Email:IndiaResource (AT) igc.org