Tata Sons has challenged a ₹1,500 crore tax demand on its $1.27 billion settlement with NTT Docomo in 2017. The settlement was reached over a now-defunct telecom joint venture between the two companies.
The GST department claims that Tata Sons is liable to pay tax on the settlement amount because it was a loan given to Tata Teleservices, the subsidiary that was involved in the joint venture. However, Tata Sons argues that the settlement was not a loan, but rather a payment of damages.
The case is currently being heard by the Bombay High Court. A hearing is scheduled for September 2023.
It is still too early to say how the case will be resolved. However, Tata Sons' challenge is likely to have implications for other companies that have settled disputes with their creditors through payment of a lump sum amount.
CAclubindia
