The Directorate General of GST Intelligence or the DGGI has issued a show-cause notice to Coca Cola India's bottler Hindustan Coca Cola Beverages for evasion of service tax.
According to the DGGI, Hindustan Coca Cola Beverages has evaded taxes to the tune of Rs 240 crore. However, the total amount along with additional interest and penalty could be around Rs 400 crore.
DGGI’s investigation showed that Coca Cola India gave Hindustan Coca Cola Beverages trade discounts and payments to the bottler amounts to financial support to ensure that Hindustan Coca Cola stays afloat. The investigation also showed that other franchisee bottlers paid service tax on the same payment and only Hindustan Coca Cola was not paying service tax. In fact, Coca Cola India took CENVAT credit for the same.
When reached out to Hindustan Coca Cola, the company said, “We are in receipt of the notice. While our team is evaluating and analysing the same, we would like to reiterate that as an ethical business entity, Hindustan Coca-Cola Beverages (HCCB) operates in full compliance with the regulatory framework and within the ambit of the laws of the land, both in letter and spirit. We continue to extend all support to the relevant authorities to reach a conclusion. Having said that, in our understanding of the law, we are confident of our position in this matter.”
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