Mallya’s two firms get Rs 91cr service tax notice

Mumbai: Directorate General of Central Excise Intelligence (DGCEI) has issued a show-cause-cum-demand notices to Vijay Mallya-owned firms United Breweries and United Spirits Ltd, for allegedly evading service tax of Rs 91 crore.

"Both the firms have evaded the service tax on sponsoring various shows and sports events," a senior DGCEI official said.

The notice is pertaining to sponsoring events like IPL, East Bengal Football Team, Force India Team, Wills India Fashion Week, Mohan Bagan Team.

The notice issued to United Breweries is for the amount of Rs 21.7 crore, while that to United Spirit is of Rs 69.3 crore.

According to the officials, a DGCEI team had recently visited the Bangalore offices of both the firms.

Officials said that if the amount was not paid within a month, penalty of 25 per cent would be imposed on the total amount.

Meanwhile, United Spirits in its statement to PTI said that the DGCEI Mumbai has asked them to furnish the soft copy of the ledger extract of Advertisement & Sales Promotion expenses for the period 2007 – 08 to 2011 – 12.

"DGCEI has, without verifying the nature of the expenses accounted for in the ledger extract, considered the entire amount as 'sponsorship services' and have served the show cause notice on 23/4/13 for Rs.69.3 crore", the statement said.

The company said that it was in the process of replying to the show cause notices by highlighting the "error".

While United Breweries in its statement to PTI said that, "DGCEI Mumbai has issued show cause cum demand notices on various sponsorship payments like IPL, Force India, United East Bengal Football Team, etc for payments totalling to Rs.21.7 crore covering the period from Oct '07 to Mar '12, ignoring payment of service taxes already paid till date".

The statement added that UB has been regular in paying service tax wherever applicable and they are in the process of filing replies and explanations shortly.