According to sources in the Excise department, the Sahara Airlines, while submitting opinion of its Chartered Accountant on service tax, had allegedly backdated it to 2003 in which it was stated that Rs 1442 crore (Rs 14.42 billion) income from advertising services provided to its group company was not taxable under advertising services.
Asked to comment on the issue, Sahara spokesperson Abhijet Sarckar told PTI: "We would like to submit that we do not know how and on what basis the department is inquiring into such an old matter."
The issue came under the scanner when the directorate general of customs and intelligence slapped a notice of about Rs 150 crore (Rs 1.5 billion), besides penalty and interest on Jetlite that was contested by the Jet Airways, saying that the tax liability was before the merger of the two airlines.
According to the sources, Sahara group had submitted the CA's opinion before the Excise department claiming that the services provided by Sahara Airlines to its sister concern Sahara India Commercial Cooperation Limited did not fall under the tax purview.
The letter submitted before the excise authorities was back-dated to 2003 which was spotted by the tax sleuths when the three-page explanation of August 2003 contained a citation of a Madras high court judgment quoted from the State Tax Today published only in 2007.
The letter quoted the STT volume and page number in the reply purportedly written in 2003, they said.
The Sahara spokesman, while responding to a written query, had refused to comment on the issue saying the matter was "still under investigation".
Jet Airways purchased Sahara Airlines from the Subroto Roy-led Sahara Group last year after prolonged negotiations and bitter legal battle that lasted nine months.
Jet had refused to pay the service tax saying that as per the agreements (relating to sale of Sahara Airlines to Jet Airways), the liability, if any, for such demands in respect of which the investigations are in progress rested with the previous owners of the airline.
Jet, which is already apprised of the tax liability, has discussed the matter in its board meeting in January where Rs 1,442 crore (Rs 14.42 billion) was received from SICCL for promotional services offered by Sahara Airlines.
