The finance ministry has slapped a tax notice of about Rs 758 crore on Delhi Development Authority (DDA) for allegedly not paying service tax since 2007.

"We have issued demand-cum-show cause notice to DDA on August 31, 2010, for not paying service tax on lease of immovable property and club or association service," a revenue department source told PTI.

The tax liability from renting of immovable property is Rs 749 crore, while from club or association it is Rs 8.7 crore, the source said. The revenue department levies 12 per cent tax on these services. "The DDA had not paid tax on the two services from 2007 till date," he added.

When contacted, DDA spokesperson said that they were not aware of any such development and were trying to find out the details. The revenue department has sought a response from DDA within 30 days after which penal action could be taken against the housing sector developer.

The DDA receives income by selling undeveloped land, developed land and renting ground. Its' income also constitutes membership fee and other fees from sports complex and club services.

Service tax liability prompts demand cum show cause notice to public developer over unpaid leases and club services; response required, penalties possible. A central revenue authority issued a demand cum show cause notice to the Delhi Development Authority alleging nonpayment of service tax on lease of immovable property and club or association services since 2007, quantifying separate tax demands and inviting a response within thirty days, after which penal action may be taken; the notice targets income streams from land sales, rentals, membership and sports complex fees.