The investigation arm of the finance ministry has asked Tata Sons, the holding company of Tata Group, to pay Rs 1,524 crore as the goods and services tax (GST) dues, a senior official told CNBC-TV18 on Tuesday.
The Directorate General of GST Intelligence (DGGI), the enforcement agency for checking indirect tax evasion, said Tata Sons is liable to pay 18 percent GST on payment of $1.17 billion to Japanese telecom firm NTT Docomo, the official said on condition of anonymity.
Tatas settled a three-year-old dispute with NTT Docomo last year, which enabled the Japanese company to exit its 26.5 percent stake in Indian telecom operator Tata Teleservices Ltd (TTSL).
A DGGI official told CNBC-TV18 that it was "in talks" with Tata Sons about the GST dues. The Mumbai unit of the DGGI booked a case in February 2019 following a detailed inspection.
"Tata Sons contesting claims; will send a show cause notice to the company in due course," the official said.
Tata Sons declined to comment to a query sent by CNBC-TV18.
However, analysts and commentators remain divided over the case and the claim raised by the government.
A senior analyst, who requested anonymity, said the tax due has been considered on the payments made to NTT Docomo. Settlements between warring business partners frequently have restrictive clauses which could be interpreted as being made in order to tolerate an act or situation.
“In the pre-GST scenario, under Section 66E (erstwhile service tax law) the consideration arising from an agreement to tolerate an act or situation would attract service tax at the earlier rate of 15 percent . This provision has been continued in the GST law under Para 5 of Schedule II at a charge of 18 percent. Thus the government has considered this tax due,” he said.
On the other hand, PwC India Partner and Leader (Indirect Tax) Pratik Jain disagrees. “It can be argued that there should be a contract where parties undertake to do something on exchange of money. In this case, money is paid pursuant to an arbitration award and hence may not get covered under this clause,” he pointed out.