Oracle asked to cough up Rs 230 crore as service tax

The government has asked IT services solutions vendor Oracle India to pay over Rs 230 crore as tax on the royalty paid to its US parent as franchise fee and for its receivables from services.

While Oracle did not respond to emailed queries on the issue, a company spokesperson said she would not comment on matters related to taxes.

The Central Board of Excise and Customs has asked the company to explain why it did not pay service tax of more than Rs 225 crore along with education cess of about Rs 5 crore for the period between 2003 to 2008, an official said.

The tax department has said that the company "had intentionally and willfully suppressed the facts of providing and receiving impugned taxable services and collection of the impugned value of such taxable services".

While over Rs 141 crore service tax has not been paid by the company on the royalty paid to parent US firm as franchisee fee, about Rs 78 crore is on its income from product and technical support consulting, it said.

US-based Oracle Corporation operates in India through Oracle India. The parent firm has a software duplication and distribution licence agreement with the Indian firm. Oracle US is the franchiser and Indian firm is the franchisee having rights and authority to duplicate and sub-license its products in India.

Source: http://www.hindustantimes.com