Taxing times for the CII

The Confederation of Indian Industries (CII) has been served a show cause notice by the Service Tax Commissionerate, demanding a payment of Rs 33 crore as service tax. According to the Commissionerate, the CII has been providing club or association services, but has not been paying service tax on the same. They have also not paid service tax on overseas trade fairs under business exhibition services, according to the show cause notice.

The CII, which organizes various popular exhibitions in the country, including motorshows and defence exhibitions, is not paying up so easily. ‘We are not defaulting in any way. We have already sought an explanation as to how membership subscription would come under the service tax net,’ says one CII spokesperson.

In India, ‘service tax’ is levied on a club or an association which has been defined as ‘person or body of persons providing services, facilities or advantages, for a subscription or any other amount, to its members.’ Entities engaged in public service are exempt from paying of service tax.

The CII has direct membership of more than 7,000 organisations, from the private and public sectors, including SMEs and MNCs. The CII also has indirect membership of over 90,000 companies from more than 350 national and regional sectoral associations. Whether the apex body is liable to pay service tax remains to be seen.