Karnataka wants Rs. 1,500 cr in sales tax from HAL

Representatives of the defence ministry and the Karnataka government will soon meet to share details of supplies made by Bangalore-based Hindustan Aeronautics Ltd (HAL) to the former, on which the state intends to levy sales tax. The Supreme Court on Tuesday asked India's defence secretary and the Karnataka chief secretary to meet over the Rs. 1,500 crore tax dispute. The state government has levied the tax demand on HAL for the 2005-09 period. This demand covers supplies to the defence ministry and clients across the globe. HAL's representative Economic Law Practice said the state-owned company has paid all its taxes. It also said supplying to the government cannot be classified as a sale and, thus, cannot be taxed. A 1984 Supreme Court judgment classified HAL as an "agent" of the defence ministry.
But Anita Shenoy, the state government's counsel, disagreed. "After 1995, there is nothing called a defence-held store," she said. HAL was a division of the defence ministry until 1995, headed by an officer of the Indian Administrative Service. It is now a company run by professional managers. Shenoy also said HAL hadn't disclosed its transactions on security grounds, making it difficult for the assessing officer to levy a tax demand.
12/01/11 India Infoline

To Read the News in full at Source, Click the Headline

Categories: Indian Aviation- In General Jan 2011