Tata Sons-Docomo deal being heard by AA over tax demand of Rs 1,500

Mumbai: The Adjudicating Authority (AA) of the Goods and Services Tax (GST) department is hearing the case pertaining to disabling of the GST demand of over Rs 1,500 crore sought by the department over the Tata-Docomo deal, officials close to the matter told ET.

The order will be passed once the AA hears both the parties. ET on Monday had reported that the matter has been adjudicated but it now reliably learnt that the hearing is at an advance stage.

In February, 2019, the Directorate General of GST Intelligence (DGGI) wing of the GST while seeking the dues argued that since Tata Sons was the holding company, it was liable to 18% GST on the payment. The GST claim, made by the DGGI, relates to the dispute settlement involving $1.27 billion in payments to the Japanese telecommunications company.


However, Tata Sons, the holding entity for the conglomerate, challenged the claim of GST liabilities on the payments made. The Tata Group had told the department that the payment was the outcome of arbitration proceedings in a London court and therefore GST was not applicable.

Subsequently, in November 2022, the salt-to-software filed a writ petition before the Bombay High Court (HC) against the department. In its plea before the HC, Tata Sons had cited a circular issued on August 3, 2022, by the Central Board of Indirect Taxes and Customs (CBIC), GST’s parent and another on February 28, 2023, for claiming that no GST could be levied on liquidated damages.

“The amount was the due 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,” DGGI is looking at it in a very technical manner,” the company had pleaded before the Bombay HC.

However in 2023, the HC allowed the department to issue the show cause notice (SCN) to the company which was further challenged by the company before the AA.

Tata Sons did not comment on the matter at an earlier occasion.

In 2017, GST was levied by the DGGI under Schedule 2 of the CGST Act, which treats the payment of loans as a service rendered. “Since Tata Sons is the holding company, it is liable to pay 18% GST on behalf of Tata Teleservices,” another senior official told ET.

NTT Docomo had acquired a 26.5% stake in group company Tata Teleservices in 2009. The two sides had agreed at the time that the Japanese company could exit the venture at a pre-determined minimum price—at least half of what it paid to acquire the stake. The Japanese firm sought to exercise that option due to Tata Teleservices' financial struggles.

The Reserve Bank of India (RBI), however, was of the view that such an exit could only take place at fair market value in tune with a rule amended in 2013. Tata Sons, then under late chairman Cyrus Mistry, cited this and declined to pay the agreed amount. Docomo filed for international arbitration and in 2017, it stated that it received from Tata Sons, $1.27 billion awarded by an international arbitration court for its stake in Tata Teleservices Ltd (TTSL).