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Meru Cabs caught in a legal row over Rs 120-crore service tax claim

Meru Cabs, one of the first radio taxi services in the country, is contesting service tax notices sent to it since 2010 in the Bombay High Court.

Meru, which launched in 2006, is dealing with four tax notices amounting to Rs 120 crore, latest filings with the registrar of companies reveal.

The company first received a notice in October 2010 from the additional director-general, Directorate General of Central Excise Intelligence (DGCEI), Mumbai, the intelligence cell of the service tax department. It was a tax demand of close to Rs 20 crore, including cess, for May 2008 to September 2010 on the meter fare component of Meru Cabs’ revenue from metered taxi operations along with applicable interest and penalties. Meru Cabs filed a petition before the Bombay High Court in May 2011, against the notice. It was admitted before the court on December 19, 2012, and is pending hearing.

Meru received a second notice dated October 3, 2011, from the commissioner, service tax, Mumbai-II, seeking tax of Rs 6.18 crore for the period between October 1, 2010, and March 31, 2011, along with applicable interest and penalty. The company then amended its petition to include the second notice. The company received a third notice dated October 20, 2012, from the commissioner, service tax, Mumbai, demanding tax of Rs 14.11 crore for April 2011 till March 2012 along with applicable interest and penalty. Then, the India Value Fund Advisors-controlled company received its fourth tax notice of more than Rs 18 crore on April 11, 2014, from the commissioner, service tax, Mumbai, for April 2012 to March 2013.

When contacted by Business Standard, Meru Cabs said, “The company has received a notice from the service tax department till FY 2013 amounting to Rs 58 crore, plus interest and penalty as applicable. As  metered taxi services are outside the purview of service tax, given this, the company has preferred to appeal the demand raised by the authorities.   In the event the service tax demand is payable, the company may be eligible to claim cenvat credit in accordance with the provisions of Cenvat Credit Rules, 2004, as may be applicable.”

While tax authorities have been issuing notices to the firm, Meru is of the view that no tax is payable, since metered taxi services are outside the purview of service tax and have been included in the negative list of services with effect from July 1, 2012.

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