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Lock horns over tax evasion

August, 07th 2009
The Delhi Metro Rail Corporation's (DMRC) association with Karnataka is more than just sharing the technical know-how with Bangalore Metro. One of DMRC's contractors, the MRM consortium involving Mitsubishi group Rotem, and Karnataka government have locked horns over the alleged sales tax evasion by the firm over the assembling of rail coaches at BEML. The state commercial taxes department's order asking the consortium to pay Rs 112 crore towards the central sales tax was challenged and after moving from high court to Supreme Court, the case is now being argued in the Karnataka Administrative Tribunal (KAT). While the state government contends that since MRM had entered into a labour contract with BEML (Bharat Earth Movers Limited) and that rail coaches were transported from Karnataka, the deal is taken as "inter-state sale''. However, the consortium's argument is that it has already paid sales tax/VAT to Delhi government towards the purchase of rolling stocks and should not be taxed by Karnataka again.