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Tata Sons has secured a significant tax relief of Rs 1,500 crore in the Docomo settlement case, as the Adjudicating Authority of the GST department dismissed the tax demand ¹.
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The Directorate General of GST Intelligence (DGGI) had claimed 18% GST on the $1.27 billion paid by Tata Group to Docomo in 2019, but Tata Sons argued it was exempt from GST ¹ ².
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The AA’s order is expected to set a precedent for companies involved in arbitration, providing clarity on GST exemptions for liquidated damages
Tata Sons has achieved a major victory in a tax dispute involving its settlement with NTT Docomo. The Adjudicating Authority of the Goods and Service Tax (GST) department has dismissed a demand of over Rs 1,500 crore, bringing relief to the company.
The dispute originated from a payment of $1.27 billion made by Tata Group to Docomo in 2019 to settle a dispute with Tata Teleservices. The DGGI claimed that this payment was subject to 18% GST, treating it as a loan to a group firm. However, Tata Sons argued that the payment resulted from arbitration proceedings in London and was exempt from GST ¹ ². The company cited circulars from the Central Board of Indirect Taxes and Customs (CBIC) in 2022 and 2023 to support its claim.
The case involves NTT Docomo’s acquisition of a 26.5% stake in Tata Teleservices in 2009. Docomo exercised its put option in 2015, but Tata Sons declined to pay the agreed amount, citing RBI regulations. Docomo then filed for international arbitration and received $1.27 billion from an arbitration court for its stake in Tata Teleservices
