It seems to be taxing times for tower infrastructure companies and among the first one to face the heat is country’s leading telecom operating company, Reliance Communication.
The Service Tax department has sent show cause demand notices and has even passed Rs 200 crore order on Reliance Communication and its subsidiaries.
Reliance Telecom, a subsidiary of Reliance Communication has been slapped with a tax order to the tune of Rs 200 crore for the years 2006-2011. Reliance Telecom operates in Gujarat, Madhya Pradesh, West Bengal , Himachal Prasdes, Odisha, Bihar, Assam and the north east of India.
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Another order of Rs 13 crore has been issued to Reliance Communication Infra. While notices raising tax demand of Rs 90 crore and Rs 13 crore has been issued to Reliance Tele Infra and Rel Communication from period 2007-2011.
These notices and order passes inline with what they had done for Bharti Infratel and GTL Infra last year.
Basically, the Central Board of Excise and Customs (CBEC) says that tower companies cannot avail CENVAT credit on goods and services used in construction of tower.
CENVAT credit is a scheme where manufacturers are allowed to set-off taxes paid on input while providing output services. The duties which are paid on parts of tower are ineligible under input tax credit under CENVAT.
According to the department, no credit can be taken incase these immovable properties are concerned.
More such telecom infra companies are likely to face the heat from the service tax department.
Rel Comm in an e-mail response told CNBC TV18 that they are contesting the department’s order on RCom which is around Rs 11 crore.
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