Bombay high court sets aside 1,500 crore IGST demand against Tata Sons

MUMBAI: Bombay high court on Thursday quashed and set aside a show cause notice issued in 2022 to Tata Sons for a demand of Rs 1,524 crore as Integrated Goods and Service Tax (IGST).

Justices Girish Kulkarni and Aarti Sathe on Thursday also agreed with Tata Sons that following the final settlement in 2017, Docomo's withdrawal of proceedings it had filed earlier in UK courts, did not constitute any 'independent agreement' to mean 'supply of services' that would attract the CGST Act.

The IGST was sought for damages worth over Rs 8,400 crore that Tata Sons, the holding company of Tata Group, paid in 2017 to Japanese company, Docomo. The damages followed settlement of disputes that emerged over a 2009 Share Holders Agreement (SHA) between the two companies. The HC held that the DG GST Intelligence was not justified in proposing to levy IGST on settlement of arbitral award in the proceedings adopted by Docomo.

On 15 Feb 2022, the department said that the damages, interest, legal and arbitration costs paid to Docomo on 30 Oct 2017 and 7 Nov 2017 under an arbitral award, attracted GST under the Goods and Services Tax Act, 2017. Tata Sons moved HC in 2023 to challenge the demand as absurd , arbitrary and without authority.

Tata's senior counsel Arvind Datar said it would be quite absurd to treat damages, awarded as judicial exercise, "as consideration or transaction value of supply'' to attract GST.

ASG Anil Singh for the Centre opposed the plea saying consent terms implied new agreement.

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