The Tata Group has approached the Bombay High Court in response to a Rs 1,500 crore goods and services tax (GST) demand stemming from its 2017 dispute settlement with NTT Docomo, which included $1.27 billion in payments to the latter.
The Directorate General of GST Intelligence (DGGI) made the GST claim, which the salt-to-software company has contested, after previously seeking the Centre’s assistance in the case. According to people close to the situation, the DGGI is determined to pursue the case.
According to reports, the agency sent an intimation of tax to the corporation in October, determined to be payable through the DRC-01 A form. “The state is issued before a notification is sent. However, the corporation has filed a writ petition. Therefore a call on the SCN will now be made until the situation is resolved by the court, “according to another source.
The Tata Group filed the petition with the Bombay High Court under Article 226 in November, and a hearing is planned for January 9. The respondents in the case are the Union of India, through the Ministry of Finance, and the Central Board of Indirect Taxes and Customs (CBIC), through the Secretary and the Additional Director, DGGI.
“Tata Sons, as the controlling firm, is required to pay 18% GST on Tata Teleservices’ behalf. DGGI is following the case, and the department believes that other firms may adopt this technique to avoid paying GST on services supplied, hence creating a precedent is essential, “ET was told by a top official.
NTT Docomo-Tata Teleservices collaboration
The Japanese mobile phone provider acquired a 26.5 percent interest in Tata Teleservices in 2009. The two parties agreed that Docomo might quit the joint at a predetermined minimum price – at least half of what it paid for the investment – and the Japanese company intended to use that option. However, the Reserve Bank of India (RBI) believed such a departure could only occur at fair market value under a rule revised in 2013.
The Tata Group, then run by the late Cyrus Mistry, cited this as a reason for failing to pay the agreed-upon money. In 2017, the Japanese mobile giant moved for international arbitration four years later, claiming that an international arbitration court granted it $1.27 billion for its interest in Tata Teleservices.