Following a court directive, the Pimpri Chinchwad Municipal Corporation (PCMC) will pay Rs 8 lakh as service tax to the department of revenue, Union finance department.

Earlier, the department had told PCMC to pay Rs 1.17 crore as service tax for the period from 2006 to 2011. The civic body collects advertisement tax, licence fee and land rent for the hoardings erected on municipal land. The revenue department told the municipal corporation to pay Rs 1.17 crore on the tax collected on these various heads from 2006-2011. However, the civic body objected this saying advertisement tax and licence fee are both taxes, so service tax should not be applicable on them.

The legal advisor of PCMC expressed this stand at the hearing before the commissioner, service tax, Pune. The commissioner rejected PCMC's argument but gave a concession in the fine amount and asked the civic body to pay the original tax amount of Rs 1.17 crore with interest.

PCMC further filed an appeal in the Tribunal court, Mumbai, in August this year. The court, however, asked the civic body to pay Rs 8 lakh within eight weeks.

Following the court order, PCMC has sought the standing committee approval for paying the amount immediately.

Confirming the court directive, Sadanand Deshmukh, legal advisor, PCMC, said it was an interim order and that the final decision was still awaited.