Delhi HC declines relief to Microsoft over Service Tax penalty
The Delhi High Court today refused to provide relief to Microsoft India on a duty demand of Rs 260 crore by the government for alleged violation of service tax norms.
By PTI |
NEW DELHI: The Delhi High Court today refused to provide relief to Microsoft India on a duty demand of Rs 260 crore by the government for alleged violation of service tax norms.
A division bench comprising Justice A K Sirki and Justice Valmiki J Mehta dismissed a petition by Microsoft India challenging the government's demand to pay Rs 260 crore, including service tax, penalty and interest.
The court observed that the IT major had aleready challenged the order to pay the amount before the Customs Excise Service Tax Appellate Tribunal (CESTAT). And as the matter was still pending before the sectoral tribunal, there was no ground to challenge before the court, the bench said.
CESTAT had directed Microsoft India to deposit Rs 70 crore for hearing its appeal, as per norms. Microsoft India, however, challenged this before the court.
The high court declined to stay the tribunal's direction but asked the government to file its reply in this matter and directed that it be listed on September 22.
The government was represented by the Addditional Solicitor General A S Chandioke and Advocate Mukesh Anand.
Last year the Service Tax Department had slapped a duty demand of Rs 128 crore, a fine of the same amount and interest, after discovering that Micosoft India's Gurgaon unit had carried out marketing services for Micosoft Singapore from 2005 onwards.
Microsoft contended this saying it was export of services and claimed it to be tax free.
However, according to the service tax department, the claim by Microsoft's India division of doing marketing work for its Singapore-based sister concern was incorrect as the documents and records showed that its receipent were in India.
The tax officials thus rejected Microsoft's claim of export and charged Microsoft India with evading service tax.
A division bench comprising Justice A K Sirki and Justice Valmiki J Mehta dismissed a petition by Microsoft India challenging the government's demand to pay Rs 260 crore, including service tax, penalty and interest.
The court observed that the IT major had aleready challenged the order to pay the amount before the Customs Excise Service Tax Appellate Tribunal (CESTAT). And as the matter was still pending before the sectoral tribunal, there was no ground to challenge before the court, the bench said.
CESTAT had directed Microsoft India to deposit Rs 70 crore for hearing its appeal, as per norms. Microsoft India, however, challenged this before the court.
The high court declined to stay the tribunal's direction but asked the government to file its reply in this matter and directed that it be listed on September 22.
The government was represented by the Addditional Solicitor General A S Chandioke and Advocate Mukesh Anand.
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Last year the Service Tax Department had slapped a duty demand of Rs 128 crore, a fine of the same amount and interest, after discovering that Micosoft India's Gurgaon unit had carried out marketing services for Micosoft Singapore from 2005 onwards.
Microsoft contended this saying it was export of services and claimed it to be tax free.
However, according to the service tax department, the claim by Microsoft's India division of doing marketing work for its Singapore-based sister concern was incorrect as the documents and records showed that its receipent were in India.
The tax officials thus rejected Microsoft's claim of export and charged Microsoft India with evading service tax.
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