Home grown automobile major Tata Motors has been issued a tax demand notice of Rs 400 crore by the service tax department.

According to sources, the demand has been raised as some of the Tata Motors authorised service stations were not deducting service tax on the bills.

Confirming the news, Tata Motors said the company has challenged the order in Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

'The demand is for the service tax amount which the company, based on legal advice and with regard to various facts and legal provisions, considers as not payable,' Tata Motors Spokesperson said in an emailed reply to The Hindu.

'The Company has preferred Appeal before CESTAT and the matter is sub-judice," the spokesperson added.

The company had reported consolidated revenues of Rs 56,002 crore for the quarter ended March 31, 2013, up 10 per cent from Rs 50,908 crore in the same period last year. The consolidated profit (after tax and post minority interest and profit in respect of associate companies) for the quarter was Rs 3,945 crore compared to Rs 6,234 crore for the same quarter of the previous year.

For entire FY12-13, the company’s consolidated revenue was up 14 per cent at Rs 1,88,818 crore, while consolidated profit for the year (after tax and post minority interest and profit in respect of associate companies) was Rs 9,893 crore, compared to Rs 13,517 crore in the same period last year.