Dinesh Kamath's news item 'CIDCO not happy with central tax notice' that was published in Newsband

CIDCO not happy with central tax notice

By Dinesh Kamath

NAVI MUMBAI: City and Industrial Development Corporation (CIDCO) is not at all happy with the Central Service Tax notice that is served to them. They are asked to pay Rs 135 crore as service tax dues on the sales of plots and properties since 2006. This notice has been issued by the Directorate of Service Tax, Mumbai. CIDCO has decided to go for legal advice from experts and then file a reply to the notice.  

CIDCO has been asked to pay Rs 135 crore as service tax dues on account of the sales of plots and properties since 2006. But according to CIDCO authorities, their organization is not a profit making body. Hence their question is why they should pay service taxes? CIDCO is a government undertaking. It’s duty is to collect the revenue which it uses for the benefit of public. CIDCO needs money for all round development purpose and hence it needs to utilize this tax money for that purpose.

CIDCO authorities feel that serving notice to them is obviously not a logical thing to do. They are bent on giving a fitting reply to the notice after seeking advise from legal experts. If necessary they might even knock the doors of High Court for justice.

“This service tax is collected by CIDCO against the sales of lands and plots in Navi Mumbai. It does earn huge amount in the sales, lease, and transfer of properties. But this amount should not be considered as a profit but just the means to carry out the overall development works in Navi Mumbai. This amount is used for public welfare and nothing else. One should not be under the wrong impression that CIDCO is a profit earning body. So how can service tax be applied to CIDCO?” questioned a CIDCO official.

Even a top official of CIDCO maintained that CIDCO is just a government agency and uses the taxes collected for development of infrastructure for the purpose of housing, roads, transportation, public health, education and social welfare. “There is nothing wrong if such notices are served to private organizations. But CIDCO is certainly not one of those institutions and hence it is wrong to serve such notices to it,” he said. 

What is left to be seen is how CIDCO will tackle the service tax department and whether CIDCO can get that department to withdraw the notice and thus get exempted from paying service tax.