Challenge AAR’s Etrade order in High Court: SC to I-T Department

MUMBAI: The Supreme Court on Monday declined to decide on the appeal filed by the income-tax department against the Mauritius-based Etrade, and instead advised the tax department to move the respective HC if it still chose to appeal against the order by the Authority for Advance Rulings. The Etrade tax case has been closely followed by international tax authorities and multinational companies alike since judicial response to such issues give an idea of the country’s stand on the contentious cross-border tax issues.

The apex court said that unless the special leave petitions involve significant questions, the appeals against the AAR orders can be filed before the respective high courts. This order also cleared the air over whether aggrieved parties, unhappy with an AAR order, can move the high court, which according to certain quarters, was final and could be appealed only before the Supreme Court. Along with Etrade, a host of other corporates were party to the petition against the orders of AAR. In its order, the apex court advised the parties to approach the respective HCs with writ petitions, if necessary, instead of moving the apex court directly.

The SC held that “unless, therefore, a special leave petition raises substantial questions of general importance or a similar question is already pending before this court for decision, this court does not entertain a special leave petition directly against an order of the tribunal.“Now it is up to the tax authorities/ applicant to consider moving the concerned high court by way of a writ petition and a division bench of the said high court would then independently decide whether the writ petition is required to be admitted based on its merits ,” said Sanjay Sanghvi, tax partner, Khaitan & Co.