United Spirits Ltd (USL) has received a significant reprieve from a substantial service tax demand, according to a regulatory filing with the exchanges. The Commissioner has granted the liquor giant complete relief on a service tax demand amounting to ₹194.5 crore.
The order also addressed key issues outlined in the show cause notice, specifically concerning service tax levied on income derived from Contract Bottling Units (CBUs) under the classification of Intellectual Property Rights (IPR) Services, as well as matters related to CENVAT credit availment and associated de novo considerations.
Consequently, the total demand faced by USL has been drastically reduced from an initial ₹527.7 crore (plus applicable interest and penalty) to a mere ₹0.88 crore (plus applicable interest and penalty). This represents a substantial victory for the Diageo-owned entity.
Despite the significant reduction, United Spirits indicated its intention to pursue further legal recourse. “The Company intends to challenge this order and will be filing an appeal before the appropriate higher authority to contest the residual demand,” USL stated in its filing. This signals the company’s commitment to minimizing its tax liabilities.
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