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Reliance Infratel under service tax scanner
March, 14th 2014

The service tax department is likely to issue a showcause notice to Reliance Infratel on an alleged service tax evasion.

The service tax department in its audit report has alleged that Reliance Infratel, a subsidiary of Reliance Communications, evaded taxes worth up to Rs 1,000 crore.

Also Read: Indirect tax refunds at Rs 43,409 cr in Apr-Feb

The allegations have been made against the backdrop of an investigation by the department for over a year.

The service tax department thinks that Reliance Infratel is liable to pay taxes on the fees it received from the group company for services rendered.

The 2009 amendment of the Service Tax Act says that services provide by a company to a group company, which it shows as income in its book of accounts, and the company which avails of the service and shows it as expenses, under those circumstances the fees that the company which provides services is liable under the tax net.

This has put lot of telecom operators under the scanner. This particular transaction between Reliance Infratel and Reliance Communication, where Rel Infra is providing optical fibre services to the parent company, is one of the transactions that has come under the scanner. The taxable amount between 2008 and 2013 could be over Rs 1,000 crore.

The company has denied the reports claiming them baseless and saying that it hasn't evaded a single penny. Reliance Infratel further added that it has not received the showcause notice yet.

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