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Home News Power Sector News PGCIL slammed with 413 crore service tax claim for transmission services

PGCIL slammed with 413 crore service tax claim for transmission services

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PGCILPowergrid Corporation of India (PGCIL), the country’s largest power transmission utility, has approached the finance ministry department over the Rs 413-crore service tax claim raised by the tax authorities earlier this month.“We, along with the power secretary, have talked to the revenue secretary to sort out the matter. In the meeting, we have been assured that our concerns are genuine,” said a senior official from the company.

The Navratna PSU was issued a show-cause notice last week by the service tax department of the Central Board of Excise and Customs for non-payment of over Rs 413 crore, which is around 28 per cent of the company’s annual profit, as service tax on transmission services for the period from May 2006 to September 2008.
“Power transmission service is not taxable. We have already replied to the notice. We have to go through the normal legal channel. Our ministry can take up the matter with the Finance Ministry,” said another senior official of the company.

The show-cause notice, however, also allegedly accuses Powergrid of deliberately suppressing some facts to evade service tax and not getting some registration certificates as per service tax rules, a claim that the company has denied.

“In public sector undertakings, this is not possible,” said the official.

Experts have, however, voiced Powergrid’s concerns contending that transmission services are not taxable.“Services, which are taxable are defined clearly in the legislation itself, and transmission of power is not one of them. It’s not known from where the department has come up with this tax now,” said a senior analyst from an accounting and consultancy firm.

Source- Business standard

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