Even as VUDA is grappling with Income Tax levied on land auction for revenue mobilisation for the State government, service tax to the extent of Rs.16 crore has been slapped on it.

Though 60 per cent of it can be contested, VUDA is questioning the very basis of raising a demand for the tax in new areas as the services of the UDA are being extended for the past three decades.

According to VUDA Vice-Chairman N. Yuvaraj, the UDA would seek the advice of a consultant on the issue.

Meanwhile, VUDA is seeking a letter from the State government that it had auctioned land for revenue mobilisation.

The Income Tax Department had levied a tax of Rs. 390 crore on VUDA for nearly Rs. 1,050 crore it raised through auction of land in 2007-08 and froze its accounts.

Subsequently, VUDA approached the High Court that gave a direction that a clarification from the government be submitted.

However, following the appellate tribunal’s order, it had remitted a tax of Rs.101 crore in six instalments.

Dr. Yuvaraj’s predecessor Kona Sasidhar, with a letter from the Chief Minister, had represented the Income Tax issue to the then Finance Minister Pranab Mukherjee.

The district Collector has written a letter to the CCLA and the Revenue Secretary on the auction carried out by VUDA.

Dr. Yuvaraj is going to Hyderabad on Saturday to meet top officials to pursue the process for a final relief from the tax imbroglio.