India Law News 23 Winter/Spring Issue 20J3

n 1789, en|amin Iranklin vrole lo }ean-alisle

Leroy lhal "...in lhis vorld nolhing can be said lo
be cerlain, excel dealh and laxes." Al lhal lime,
he vould scarcely have realized hov much of an
anachronism his commenl aboul lhe cerlainly of laxes
vould become in years lo come. Wilh lhe economic
dovnlurn in lhe recenl years and lhe consequenl
aggressive allilude of lax adminislralors, arlicularly
in emerging economies like India, il vould nol be an
exaggeralion lo slale lhal lhe only lhing cerlain aboul
laxes loday is lhe uncerlainly of ils alicalion.
Given lhis backdro, a holislic and more ro-aclive
aroach lo lax conlroversy managemenl becomes
necessary. In facl, lhe concels of lax conlroversy
managemenl nov oughl lo be firmly enlrenched in lhe
realm of cororale governance. This arlicle aims lo
shed lighl on fev key asecls of lax conlroversy
managemenl secific lo India lhal vould be relevanl
for mullinalional comanies lhal are oeraling in India
or are even exloring oorlunilies or finalizing
business lans for inveslmenl inlo India.
Tax conlroversy may broadly arise oul of lhree
areas: (i) lax aulhorilies disagreeing vilh lax osilions
adoled by a comany on legal grounds, (ii) lax
aulhorilies disagreeing vilh lax osilions adoled by a
comany on accounl of erroneous conlracl drafling
lhal does nol reflecl lhe inlended lax osilions, and
(iii) difference in inlerrelalion of lax clauses in a
conlracl.
I. CONTROVLRSILS ARISING OUT OI TAX
AUTHORITILS DISAGRLLING ON LLGAL
GROUNDS WITH TAX POSITIONS ADOPTLD
BY A COMPANY
In a counlry like India, vilh an increasingly
aggressive lax adminislralion, any lax osilion lhal
does nol lilerally emerge from lhe language of lhe
slalule lends lo be disuled by lhe aulhorilies. Given
lhe mullilicily of laxes, lhis roblem gels magnified
manifold in lhe realm of indirecl laxes in India (e.g.,
lhere are federal laxes like lhe cusloms duly, excise
duly and service lax lhal are regulaled by lhe Cenlral
Governmenl, slale-level laxes like VAT and enlry laxes,
and federal laxes/cesses like Cenlral Sales Tax and
uilding Cess, vhich are adminislered by lhe
reseclive Slale Governmenls). Given lhe large number
of lax |urisdiclions, lax conlroversy managemenl is
essenlial.
J. Document The Rationale Behind Lvery Tax
Position
The firsl sle lovards sound lax conlroversy
managemenl is lo documenl lhe ralionale behind every
lax osilion. Ior any lax osilion lhal does nol seem lo
be suorled by a simle lileral inlerrelalion of lhe
relevanl lax slalule, a legal oinion oughl lo be
oblained exlaining lhe legal basis behind such a
osilion. These oinions hel lo eslablish lhe bona
fides of a laxayer, should liligalion be inilialed by lhe
various Slale/Cenlral Governmenl lax aulhorilies
(referred lo hereinafler as Revenue). In addilion,
delailed disclosures should be made lo lhe relevanl lax
aulhorilies aboul any such lax osilion, along vilh
reference lo a suorling legal oinion.
The facl lhal a legal oinion has been oblained
should be disclosed lo lhe lax aulhorilies even if lhe
aclual oinion is nol aclually rovided. In a decision of
TAX CONTROVLRSY MANAGLMLNT IORMULTINATIONAL CORPORATIONS ININDIA
By Sujit Ghosh and Sudipta Bhattacharjee
India Law News 24 Winter/Spring Issue 20J3
lhe Cenlral Lxcise and Service Tax Tribunal
(CLSTAT) in lhe case of Pccnan Spar| Pritaic Iiniic!
t. Ccnnissicncr cj Ccnira| |xcisc, (2004 |164j L.L.T. 282
|Tri. - Del.j), lhe Tribunal found lhal lhe laxayer had
nol acled in good failh, as lhe legal oinion oblained by
him in suorl of ils lax osilion vas never menlioned
or disclosed lo lhe aulhorilies.
Il is also alvays rudenl lo make clear and cogenl
disclosures in lax relurns, aboul lhe sensilive lax
osilion lhal a laxayer may have adoled. Slalulory
relurn formals, hovever, oflen do nol rovide sace for
such disclosures (as mosl relurns are nov being
required lo be filed eleclronically). In such cases, il is
alvays advisable lo submil a rinl of lhe relurn and
allach a covering vilh aroriale disclosures, and file
il vilh lhe lax aulhorilies.
These sles hel eslablish lhe bona fides of lhe lax-
ayer before a courl/lribunal and avoid enallies even
if lhe courl re|ecls lhe lax osilion. Ior examle, in a
CLSTAT decision in lhe case of Manga|crc C|cnica|s an!
|crii|izcrs t. Ccnnr. Oj Ccni. |xcisc (2009 |248j L.L.T.
647), limely declaralions by lhe laxayer venl a long
vay avoiding enallies. Lslablishing bona fides in lhis
vay also hels revenl lhe lax aulhorilies from
invoking lhe draconian exlended eriod of limilalion
vhich could resull in re-oening lax osilions laken by
lhe laxayer over lhe revious five years.
2. Obtain Advance Rulings On Key Tax Positions
Having laken care lo eslablish bona fides, lhe
second sle in lax conlroversy managemenl is lo lry lo
oblain confirmalion of lhe lax osilion adoled. The
folloving olions are generally available under mosl
lax slalules.
Advance Rulings for Iederal Taxes
Ior federal laxes (like Income Tax, Cusloms, Lxcise,
and Service Tax), a foreign comany exloring lhe
olion of selling u a business in India can aroach
lhe Aulhorily for Advance Ruling (AAR), based in
Nev Delhi, for an advance confirmalion of ils crilical
lax osilions.
While lhe rocess may lake aboul six monlhs, il
may be lime vell senl, given lhal il rovides lhe
foreign comany vilh some cerlainly. Conversely, an
adverse advance ruling becomes binding on lhe
laxayer vilhoul any slalulory aeal and lhe only
olion in lhal case vould be lo aroach lhe
|urisdiclional High Courl (lhe highesl courl in a Slale)
for a vril remedy againsl lhe AAR's order.
Irom a raclical slandoinl, lhis olion should be
exercised only vhen lhere is an obvious ambiguily
vilh regard lo alicabilily and/or inlerrelalion of
any rovision of lav. Thal is lo say, il is never a good
idea lo seek such a ruling in cases vhere lhe
inlerrelalion is clear and unambiguous. A negalive
ruling in such cases, could cause more hardshi lhan
any benefil lo lhe alicanl.
Advance Rulings under State VAT Laws
Mosl Slale VAT slalules also rovide for similar
advance ruling mechanisms lhrough vhal is commonly
knovn as 'Delerminalion of Disuled Queslions'
(DDQ). While, lhese are nol as effeclive as lhe AAR,
lhe DDQ roule can be used effeclively lo engender
cerlainly vilh regard lo Slale VAT osilions.
Ground level officers of lhe lax dearlmenl are of-
len less recelive lo a nuanced lax osilion more so
vilh resecl lo Slale level laxes like VAT. Oflen, roer
arecialion of lhe legal basis behind a nuanced VAT
osilion is found only al a High Courl level or Sureme
Courl Level. Given lhal DDQs are usually
adminislered by Slale VAT aulhorilies such DDQs are
lilled againsl lhe laxayer.
Hovever, even such negalive resulls may rovide
lhe laxayer (laclically) a quicker and oul-of-lurn
access lo lhe High Courl for a roer arecialion of
lhe legal argumenls and a confirmalion of lhe
laxayer's osilion. Thal is lhe real value roosilion
of lhe DDQ rocess. To elaborale, ordinarily, before a
queslion of lav can be raised before lhe High Courl, a
laxayer musl exhausl all allernale remedies available
under lhe lax slalues, such as lax assessmenl,
dearlmenlal aeal and lax lribunal, among olhers.
This means lhal lhe lead lime for a laxayer before il
can aroach lhe High Courl in lhe regular aellale
rocedure could be anyvhere belveen four lo six
years. Such a long lead lime can be lruncaled,
hovever, by oling for lhe DDQ roule. Aeal from a
India Law News 25 Winter/Spring Issue 20J3
DDQ ruling handed dovn by lhe Commissioner of
VAT lies direclly lo lhe High Courl via vril elilion.
i) Iormal Clarifications
Inforlunalely, lhe olion of seeking an AAR ruling
or DDQ is oflen reslricled lo rescribed/defined sels of
issues (such as laxabilily of lransaclions, lhe
alicabilily of a given lax exemlion). Ior lhe
remaining universe of issues, lhere are no
inslilulionalized mechanisms for ufronl quasi
|udicial/|udicial confirmalion.
In lhese cases, one of lhe olions available is lo seek
a vrillen adminislralive clarificalion from lhe
Revenue. Ior examle, Seclion 37 of lhe Cenlral
Lxcise Acl aulhorizes lhe Cenlral oard of Lxcise and
Cusloms (CLC) lo issue orders, inslruclions and
direclions for lhe urose of uniformily in lhe
classificalion of excisable goods or vilh resecl lo levy
of dulies of excise on such goods.
Such clarificalions are binding on lhe Revenue,
lhough nol on lhe quasi-|udicial/|udicial aulhorilies and
lhe laxayer. Thal is lo say, once a clarificalion has
been oblained, lhe Revenue cannol lake a viev
conlrary lo lhe clarificalion lo lhe delrimenl of lhe
laxayer concerned.
Slralegically, seeking such a clarificalion also serves
lvo addilional uroses.
Iirsl, if a clarificalion issued by lhe Revenue is
alenlly erroneous in lav and againsl lhe laxayer's
inleresl, a vril elilion can be filed before lhe High
Courl and a quick and oul-of-lurn resolulion lo lhe lax
issues can be execled. Hovever, if no such
clarificalion vas ever oblained, lhe laxayer vould
have had lo exhausl all allernale remedies available
under lhe lax slalules, such as lax assessmenl,
dearlmenlal aeal, and lax lribunal, before il is
ermilled lo aroach lhe High Courl. This means,
vhile lhe lead lime for a laxayer before il can
aroach lhe High Courl in lhe regular aellale
rocedure is anyvhere belveen four lo six years, such
a long lead lime can be enlirely circumvenled by
adoling lhis roule, lhereby enabling exedilious
disensalion of |uslice.
Second, even if a clarificalion is nol rovided by lhe
Revenue ( for any reason) desile lhe laxayer having
aroached lhem, lhe efforls underlaken in oblaining
such a clarificalion hels lo eslablish lhe bona fides of
lhe laxayer before a lribunal/courl and lhereby shields
il againsl any enal imlicalions al a laler dale.
(ii) Advance Pricing Agreements (APAs)
While rovisions lo facililale execulion of APAs
vere inlroduced in lhe Income Tax Acl, 1961 ('Acl')
lhrough lhe Inion (Iederal) udgel of 2012, lhe
framevork for lhe APA scheme vas announced
relalively recenlly lhrough a circular daled Augusl 30,
2012, by lhe Cenlral oard of Direcl Taxes.
APAs rovide a melhod for laxayers (having
cross-border lransaclions vilh 'relaled arlies') lo agree
on a rice, melhod or assumlion. Inlernalionally,
APAs have been effeclively used by lhe lax
adminislralion and large enlily laxayers lo come lo an
underslanding regarding an arm's lenglh rice in
advance of imlemenling a lransaclion, and can go a
long vay in curbing lransfer ricing liligalion in India.
(iii)Mutual Agreement Process (MAP)
In case of disules arising oul of inlerrelalion of
Double Tax Avoidance Agreemenls (DTAA), a
laxayer seeking lrealy relief has lhe allernalive olion
of aroaching lhe Comelenl Aulhorily localed in ils
home |urisdiclion. Such Comelenl Aulhorily vould
lhen negoliale vilh lhe Comelenl Aulhorily of lhe
counler arly Slale lo arrive al an amicable solulion.
Once such a roceeding has been inilialed, any disule
vilh lhe Revenue/aellale aulhorilies regarding lhe
assessmenl year in relalion lo vhich MAP has been
inilialed vould be kel in abeyance. Iurlher, lax
demands also gel slayed in conlexl of Indo I.S./ IK
lrealies.
The oulcome of MAP, hovever, is nol binding on
lhe laxayer, allhough il is binding on lhe Revenue.
The advanlage of MAP is lhal il byasses rolracled
liligalion vilh lhe domeslic lax aulhorilies and
mullile aellale forums and lhus achieves a quicker
resolulion of disules.
India Law News 26 Winter/Spring Issue 20J3
(iv) Payment of tax under protest
Paymenl of lax/ duly under rolesl is anolher
olion vhich can be exercised under indirecl lax lavs.
y oling lo ay lhe lax under rolesl lhe laxayer can
miligale lhe inleresl and enally imlicalions lhal may
arise if lhe lax osilion adoled by lhe laxayer is
subsequenlly overruled by lhe aellale bodies. Il also
assisls in lriggering a lax-relaled cause of legal aclion.
Once lhe lax has aid under rolesl, lhe Revenue
vould be forced lo iniliale lax roceedings againsl lhe
laxayer. Such early inilialion of lax roceedings hels
in early resolulion of lhe disule.
3. Best Practices To Manage Tax Litigation
Optimally
If efforls lo oblain advance confirmalion of a lax
osilion fail and lax liligalion becomes unavoidable,
some of lhe besl raclices during liligalion are as
follovs:
(i) Capturing factual subtleties comprehensively at the
first adjudication stage
Tax liligalion in India lyically commences lhrough
a shov cause nolice from lhe lax aulhorilies. In
resonse lo lhe shov cause nolice il is imorlanl lo sel
forlh all lhe faclual nuances of lhe maller, including
relevanl references lo underlying documenls like
conlracl clauses, invoices, lax aymenl receils, books
of accounls. The robabilily of success in lax liligalion
deends on hov clearly lhe facls have been resenled
before lhe lax aulhorilies/ad|udicaling forums. If all
lhe facls have nol been inlroduced al lhe lover
ad|udicalory level, il is generally imermissible lo
inlroduce such facls al lhe higher aellale slage.
(ii) Lffective usage of writ remedy as a tax controversy
management tool
Slale High Courls in India are vesled vilh lhe
over lo issue vrils and direclions lo any erson or
aulhorily, including any Governmenl vilhin lheir
lerrilorial |urisdiclion. Inlike lhe Sureme Courl of
India, High Courls are nol limiled lo enforcemenl of
fundamenlal human righls guaranleed under lhe
Conslilulion. The vrile |urisdiclion of lhe High Courls
exlends lo anq ci|cr purpcsc as sel forlh in Arlicle 226
of lhe Conslilulion. Similarly, under Arlicle 227, High
Courls have been granled a over of suerinlendence
over a|| ccuris an! iri|una|s in lheir lerrilorial
|urisdiclion.
Thus, Arlicle 226 read vilh 227 of lhe Conslilulion
of India, granls vide overs lo lhe High Courls, and
laxayers can use lhis avenue effeclively for lax
conlroversy managemenl. Tyically High Courls are
reluclanl lo inlerfere in lax mallers under Arlicle 226
and 227 because of lhe exislence of allernalive
remedies. Hovever, as vas held in Assi. Cc||ccicr,
Ccnira| |xcisc t. Oun|cp |n!ia Ii!., AIR 1985 SC 330, 332,
lhe High Courl can inlervene vhere slalulory
remedies are enlirely ill-suiled lo meel lhe demands of
exlraordinary silualions, as for inslance vhere lhe very
vires of lhe slalule is in queslion.. The lyes of vril
remedies usually erlinenl for lax mallers are cerliorari
and mandamus.
Occasionally, clarifying circulars/inslruclions are
issued by lax aulhorilies lhal are alenlly againsl lhe
slalulory rovisions. Slalulory aellale roceedings
vill nol remedy such clarifying circulars and aggrieved
laxayers should nol hesilale lo exlore vril remedies
lo challenge lhem. Anolher inslance vhere vril remedy
may be aroriale is vhere lhe laxable base under
Cenlral and Slale laxes overla, leading lo a olenlial
exosure lo double laxalion. Soflvare is a lyical
examle vhere, in some lransaclions, Slale VAT and
Service Tax are being assessed and aid on lhe same
laxable base. Wril remedies are also useful vhen lhere
are aarenl conlradiclions belveen legislalions. Ior
examle, lhe scoe and exlenl of lax benefils envisaged
under lhe lavs governing Secial Lconomic Zones
oflen conlradicl lhe relevanl rovisions under lhe
reseclive lax slalules.
The High Courls' over of suerinlendence over
lover courls under Arlicle 227 also oens u avenues
for remedy if faced vilh an adverse order from a
lribunal under lhe relevanl High Courl's lerrilorial
|urisdiclion.
Inlil very recenlly il vas nol clear vhelher vril
remedies againsl an AAR order could be ursued in a
High Courl or only before lhe Sureme Courl. Il is only
lhrough lhe recenl |udgmenl by lhe Sureme Courl in
lhe case of Cc|un|ia Spcrisucar |2012 (7) SCALL 53j lhal
India Law News 27 Winter/Spring Issue 20J3
lhe issue slands sellled in favor of High Courls having
|urisdiclion.
While challenging a ruling from lhe AAR, lhe
queslion of vhich High Courl lo aroach becomes
conlenlious al limes. The Delhi High Courl aears an
allraclive ansver because lhe AAR is localed in Delhi.
Hovever, if lhe aggrieved arly is localed in anolher
Slale, lhe High Courl of lhal Slale may be an
aroriale forum as vell. In lhe case of GSPI |n!ia
Transcc Iiniic! |2012-TIOL-665-HC-AHM-STj lhe
Gu|aral High Courl issued vril remedy lo lhe
aggrieved arly (based oul of Gu|aral) againsl a
alenlly erroneous AAR order.
(iii)Doctrine of Precedence (and risk of blind
application of past decisions) & Doctrine of
Merger
Inder Arlicle 141 of lhe Conslilulion of India, lav
declared by lhe Sureme Courl has lhe slalus of lhe
lav of lhe land and binds all |udicial forums.
Consequenlly, laxayers rely uon Sureme Courl
recedenl vhen laking a lax osilion or embarking
uon lax liligalion vilh lhe Revenue.
Hovever, lhe doclrine of recedence has several
excelions, vhich oughl lo be faclored by a laxayer,
before il relies on lhe same. These excelions are as
follovs:
Reversal of lhe decisions
Overruling of lhe decisions
Refusal lo follov
Dislinguishing lhe decisions on facls
Pcr incurian - vhen a |udicial decision has been
rendered vilhoul considering a binding courl
decision / legal rovision
Precedenl su| si|cniic
Inconsislency vilh earlier decisions of higher
courls
Inconsislency vilh earlier decisions of lhe same
rank
Decisions of equally divided courls
Wilh resecl lo lhe su| si|cniic recedenl, Suprcnc
Ccuri in MCO t. Gurnan Kaur |AIR 1989 SC 38j lucidly
exlained lhis as follovs: The Courl may consciously
decide in favor of one arly because of oinl A, vhich
il considers and ronounces uon. Il may be shovn,
hovever, lhal logically lhe courl should nol have
decided in favor of lhe arlicular arly unless il also
decided oinl in his favor, bul oinl vas nol
argued or considered by lhe courl. In such
circumslances, allhough Poinl vas logically involved
in lhe facls and allhough lhe case had a secific
oulcome, lhe decision is nol an aulhorily on Poinl .
Poinl is said lo have been assed su|-si|cniic.
Al limes, bolh lhe laxayer and lhe Revenue use
lhe roule of filing Secial Leave Pelilions (SLP)
before lhe Sureme Courl lo challenge lhe order of a
lover courl. The Sureme Courl is seleclive in granling
lhe leave lo aeal under lhe SLPs. Il is oflen argued
lhal re|eclion of an SLP againsl a lover courl order
denoles a slam of aroval by lhe Sureme Courl of
such lover courl order
Such an argumenl vould is only arlially correcl.
The concel of lhe doclrine of merger (i.e., vhen lhe
decision of lhe lover courls merge vilh lhal of lhe
higher courl), does nol aly lo cases vhere lhe SLPs
have been dismissed vhelher by a seaking or non-
seaking order. Therefore, laxayers vould be laking
a greal risk in relying on such dismissals lo argue lhal
lhe decision of lhe lover courl in a given silualion has,
in effecl, been affirmed by lhe Sureme Courl.
Moreover, lhe doclrine of merger cannol be invoked
unless SLPs are admilled and converled inlo civil
aeals and such civil aeals are disosed of on
merils by lhe Sureme Courl.
II. TAX CONTROVLRSILS ARISING OUT OI TAX
AUTHORITILS DISAGRLLING WITH TAX
POSITIONS ADOPTLD BY A COMPANY ON
ACCOUNT OI LRRONLOUS CONTRACT
DRAITING
Tax conlroversies of lhis nalure are common and
arise vherever lhe lax and legal dearlmenls in
comanies vork in silos. While lhe legal dearlmenl is
in charge of finalizing lhe conlracl and lhe lax leam is
in charge of lhe lax osilions, oflen, lax nuances lhal
oughl lo have been incororaled in lhe conlracl sli
lhrough lhe cracks and laler gel challenged by lhe lax
aulhorilies. Il is imorlanl, lherefore, lhal lhe lax leam
arliculales lhe key imeralives of lhe lax
osilions/lanning olions faclored by lhem lo lhe
legal leam, vho in lurn should ensure lhal such
India Law News 28 Winter/Spring Issue 20J3
imeralives are duly arliculaled in lhe conlracl
documenls.
III. TAX CONTROVLRSILS BLTWLLN PRIVATL
PARTILS ARISING OUT OI DIIILRLNCLS IN
INTLRPRLTATION OI TAX CLAUSLS IN A
CONTRACT
Tax conlroversies belveen rivale arlies arising
oul of differenl conlraclual inlerrelalion are common
and oflen lead lo significanl lime and cosl exendilures
in negolialions, arbilralion roceedings, and courl
roceedings. While lhese roceedings may nol be
comlelely avoidable, effeclive miligalion is ossible lo
a large exlenl by comrehensive documenlalion of lax
lanning olions and a commercial underslanding
belveen lhe arlies on key lax oinls. The biggesl areas
of disule arise oul of inlerrelalion of clauses dealing
vilh change in lax lavs/slalulory varialions and lhe
exlenl of reimbursemenl of laxes. In lhis conlexl, lhe
folloving key oinls are crilical lo be documenled in a
lucid and comrehensive manner lo avoid fulure
disules:
i) Whal are lhe laxes lo be borne by each arly`
ii) If lhe conlracl rice is lo include all laxes, does
il also include laxes vhich are slalulorily
ayable by lhe cuslomer (such as service lax on
a reverse charge basis, cusloms duly elc)` If
yes, lhal should be clearly secified along vilh
lhe necessary nc!us cpcran!i (for examle,
vould cusloms duly or service lax aid on a
reverse charge basis by a cuslomer be deducled
from fulure aymenls lo be made lo lhe
conlraclor),
iii) Ior laxes/cesses such as enlry lax and building
cess vhich can be lhe slalulory liabilily of
eilher lhe cuslomer or lhe conlraclor deending
on various faclors, vho bears lhe
resonsibilily`
iv) Ior laxes lhal vould be reimbursed by lhe
cuslomer, vhal vould be lhe basis for such
reimbursemenl` Whal sorl of documenlary
roof vould be required`
v) If cerlain lax benefils have been faclored vhich
are conlingenl uon secific
cerlificalion/documenlalion requiremenls, vho
bears lhe risk of non-availabilily of such
cerlificalion/documenlalion` In general, vho
bears lhe risk of lhe lax osilions`
vi) The scoe and exlenl of lhe clause dealing vilh
imacl of change in lax lavs oughl lo be
comrehensively documenled:
a. The conlracl should clearly indicale
vhelher il includes change in laxes only
for direcl lransaclions belveen lhe
conlracling arlies or vhelher sub-conlracl
level change in laxes vould also be
covered,
b. Ideally, for lhe crilical laxes in a high-value
conlracl, lhere oughl lo be a delailed rice
schedule secifying lhe quanlum and rale
of such laxes faclored on lhe dale of lhe
conlracl, so lhal calculalion of imacl of
change in lax lavs is easier,
c. If lhe conlracl in queslion sans over a 2-3
year eriod, il needs lo be documenled as
lo vho bears lhe risk of big-lickel lax
reforms like inlroduclion of lhe Direcl
Taxes Code, comrehensive Goods and
Services Tax elc and hov lhese changes are
lo be deall vilh,
d. Whal conslilules a 'change in lax lavs'
needs lo be very clearly discussed and
documenled lo avoid fulure disules.
Seclion 64A of lhe Sale of Goods Acl, 1930 rovides
for indemnificalion of affecled arly on imosilion/
remission or increase/ decrease of cusloms/excise duly
and lax on sale/urchase of goods, sub|ecl lo a conlracl
lo lhe conlrary. In facl, in lhe recenl decision of Pcarcq
Ia| B|auan Asscciaiicn (2011-TIOL-114-HC-DLL-ST),
lhe Delhi High Courl relied uon Seclion 64A lo decide
a civil money suil for claim of service lax nol originally
envisaged under lhe conlracl and overruled a secific
conlraclual clause mandaling lhe lessor (i.e., lhe service
rovider) lo bear all lhe municial, local and olher
laxes. y doing so, lhe Delhi High Courl has
effeclively, exlended lhe concel of Seclion 64A lo
service lransaclions as vell. Thus, failing lo clearly
documenl lhe imacl of a 'change in lax lavs' may lead
lo unforeseen consequences in a liligalion/arbilralion.
India Law News 29 Winter/Spring Issue 20J3
CONCLUSION
While comlele miligalion of lax conlroversies
vould nol be ossible in loday's dynamic business
environmenl, lhe besl raclices oullined above vould
hel olimize lax conlroversy managemenl in India.
Whal is required is an inlegraled and ro-aclive
aroach lo cryslallize lhe concels and besl-raclices
of lax conlroversy managemenl as a arl of lhe overall
cororale governance framevork.
While il is lrue lhal jusiicc !c|aqc! is jusiicc !cnic!,
oflen limes vhal is also racliced by lhe |udiciary is lhe
concel of |uslice hurried is |uslice buried. Therefore,
lhe arl of Indian liligalion managemenl is erhas lo
imbibe lhe virlues of alience, couled vilh some of
lhe besl raclices menlioned in lhis arlicle!
Sujit 6bosb is a Partuer at BHR leqal auJ leaJs tbe
tax litiqatiou practice of tbe firm. Ee bas over 17
years of experieuce iu tbe fielJ of taxatiou. Ee
specializes iu iuJirect taxes {Customs, vAT, service
tax auJ Fxcise laws) auJ is au iuJustry expert iu tbe
Power, Aviatiou, 0efeuse, auJ lufrastructure
Sectors. Ee is aJmitteJ to tbe Bar Couucil of 0elbi
auJ is au arquiuq couusel before various quasi-
juJicial auJ juJicial forums iucluJiuq tbe Supreme
Court of luJia. Sujit cau be coutacteJ at
Sujit.6bosbbmrleqal.iu.
SuJipta Bbattacbarjee is au Associate 0irector witb
BHR leqal auJ bas siquificaut experieuce iu
aJvisiuq clieuts iu tbe lufrastructure Sector. Ee bas
over seveu years of experieuce iu tbe fielJ of
taxatiou. SuJipta cau be coutacteJ at
SuJipta.bbmrleqal.iu.