The Tata Group has knocked on the Bombay High Court’s doors against a Rs 1,500 crore goods and services tax (GST) claim related to its 2017 dispute settlement with NTT Docomo, which involved $1.27 billion in payments to the latter.
The GST claim has been made by the Directorate General of GST Intelligence (DGGI) which the salt-to-software conglomerate has challenged, after having sought the Centre’s invention in the matter earlier. The DGGI is intent on pursuing the case, officials close to the development told Economic Times.
The agency had in October issued an intimation of tax to the company, ascertained as payable through the DRC-01 A form, sources added. “The said form is issued before a notice is sent. However, the company has filed a writ petition and, therefore, a call on the SCN will now be taken once the matter is decided by the court,” according to another person in the know of it.
The Tata Group filed the writ before the Bombay High Court in November under Article 226 and hearing on the matter is scheduled for January 9. Union of India, through the Ministry of Finance, and the Central Board of Indirect Taxes & Customs (CBIC), through the Secretary and the Additional Director, DGGI, have been made respondents in the case.
According to the conglomerate, the payment was the outcome of arbitration proceedings in a London court and, hence, GST was not applicable. “The amount was the dues paid on behalf of Tata Teleservices by Tata Sons and not for any services rendered by Docomo. It is an arbitration case that was paid and closed,” a senior official shared.
“Since Tata Sons is the holding company, it is liable to pay 18 per cent GST on behalf of Tata Teleservices. The matter is being pursued by DGGI, and the department is of the view that this route could be taken by other companies to avoid paying GST levied on services rendered and, hence, setting a precedent is a must,” a senior official told ET.
NTT Docomo-Tata Teleservices deal
In 2009, the Japanese mobile phone operator picked up a 26.5 per cent stake in Tata Teleservices. It was agreed between the two sides that Docomo could exit the venture at a pre-determined minimum price – at least half of what it paid to acquire the stake and the Japanese firm sought to exercise that option. However, the Reserve Bank of India (RBI) was of the view that an exit like this could only take place at fair market value in accordance with a rule amended in 2013.
This was cited by the Tata Group, then being led by the late Cyrus Mistry, and said it couldn’t pay the agreed sum. Four years later in 2017, the Japanese mobile company filed for international arbitration in which it said that it received from Tata Sons $1.27 billion awarded by an international arbitration court for its stake in Tata Teleservices.
