Tata Sons gets big relief, gets relief from GST case worth Rs 1500 crore
In a major relief to Tata Sons, the Goods and Services Tax (GST) department’s tribunal (AA) has rejected the GST demand of over Rs 1,500 crore on the company over a settlement with DoCoMo. Officials associated with the case said that the AA’s order will set an example for companies engaged in arbitration. An official said the party has the option to challenge it in the High Court.
What was the matter?
In 2019, the Directorate General of GST Intelligence (DGGI) had claimed 18% GST on $1.27 billion that the Tata group holding company paid to the Japanese telecom company to settle its dispute with Tata Teleservices in 2017. It argued that since the payment was made on behalf of Tata Teleservices, it should be treated as a loan from Tata Sons to the group firm and hence liable to 18% GST. Tata Sons challenged this claim, arguing that the payment was the result of arbitration proceedings in a London court and hence GST was not applicable.
The wire is connected to 2022
After this, in November 2022, this salt-to-software company filed a writ petition in the Bombay High Court, citing a circular issued by the Central Board of Indirect Taxes and Customs (CBIC) on August 3, 2022 and another circular issued on February 28, 2023, claiming that no GST can be levied on liquidated damages. The company argued in the High Court that this amount was the outstanding amount paid by Tata Sons on behalf of Tata Teleservices and not for any service provided by Docomo.
