Tata Group has approached the Bombay High Court to contest a Rs 1,500-crore goods and services tax (GST) notice issued by the Directorate General of GST Intelligence (DGGI). The notice is related to Tata's 2017 dispute settlement with Japanese telecom operator NTT Docomo, according to an Economic Times report.
In 2017, Tata had to make settlements worth $1.27 billion with the Japanese company. This was the result of an international arbitration proceeding at a London court.
The arbitration took place after NTT Docomo exercised its right to sell its stake in Tata Teleservices, a Tata Group company, which it acquired in 2009. However, due to disagreements over what's the fair price, the Japanese company had filed for international arbitration.
Following this, the DGGI claimed that Tata's payment counts as 'services rendered' and hence comes under the ambit of GST. This is what the Tata Group is presently contesting in court.
"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 familiar with the development told ET.
The DGGI suspects that other companies would pursue a route similar to Tata's to avoid paying GST levied on services rendered.
"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," the official added.