Taxable Services
SC issues notice to Vodafone India's former non-executive chairman in svc tax case
This story was originally published at 19:59 IST on 3 January 2025
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NEW DELHI – The Supreme Court on Friday issued a notice to Vodafone India's former chairman Analjit Singh on a petition by Commissioner of Service Tax against an order which rejected a service tax demand of INR 129.41 million against Singh, saying he was wrongly held as a service provider while receiving "call option fee".
The case has its genesis from the tax department conducting an audit of Singh for the period 2007-08 to 2010-11. The tax department said that Singh was having income in the form of "call option fee", but had not paid service tax treating the income as non-taxable.
The tax department said that the amount was received by Singh for rendering taxable services called "support service of business or commerce" under the Finance Act, 1994. Further, the tax department also invoked Rule 5 of Service Tax (Determination of Value) Rules, 2006, to include the amount received in the name of "call option fee" in taxable value. Accordingly, the tax department demands service tax amounting to INR 129.41 million, including education cess and higher education cess, along with proportionate interest and penalties.
In 2007, a framework agreement was entered among Analjit Singh, its companies with Vodafone India Services Pvt. Ltd. and Vodafone International Holdings BV. The framework agreement included the limits imposed by the government on foreign investment in shares of Singh's companies. In consideration of the call option granted to Vodafone, the latter agreed to pay $102 million per annum as option fee to Singh from May 1, 2007. In 2010, a similar additional option fee was paid to Singh in other transactions. End
Reported by Surya Tripathi
Edited by Deepshikha Bhardwaj
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