Service tax notice sent to IT firms

Wipro, Polaris, CMC and HCL Tech get notices.

Several IT companies including Wipro, Polaris Software, CMC and HCL Technologies have received show-cause notices from the tax department regarding payment of service tax on repair and maintenance of software.

The notices have been issued following an internal directive sent by the Central Board of Customs and Excise to its field formations to tax the category of service with effect from July 9, 2004.

Service tax department officials said that preliminary inquiries had been initiated with several IT companies and notices had been issued in a few cases.

When contacted, company executives of HCL Technologies, CMC and Polaris Software confirmed that they had received notices from the service tax department.

Praful Basu Roy, CFO, Polaris Software said the burden could be around Rs 3 crore for the company.

CMC Chief Financial Officer JK Gupta said the company was planning to contest the claim of the tax department to levy the tax retrospectively. "However, for the future, we will pass on the burden of the tax on the consumer," he said.