HC rejects Wipro's plea on VAT

Hearing a petition by the export division of Wipro, Justice Ashok B Hinchigeri on Friday refused to entertain the writ petition and said the matter should be examined by the Appellate Authority for Commercial Taxes.

The Court, which refused to look into the merits and demerits of the matter, has directed the company to pay up 50 per cent of the tax amount before appealing to the appellate authority. The Court has allowed the petitioners to file an appeal within two weeks.

The export division of Wipro had developed software for various companies, which in turn used to export the product for Wipro. However the company has failed to produce required statutory forms like H- forms to claim tax exemption.

Rs 22 crore

The Department of Commercial Taxes (DCT) inspected and assessed the dealers for sale of software. Finding huge amounts of software being sold to several companies, the department levied Rs 22 crore as Value Added Tax (VAT).

The petitioners challenged it in the High Court stating that it was service-oriented and could not be subject to VAT as they were already paying service tax under the Act on Development of Software.

The petitioners sought to quash the assessment order dated October 26, 2010.
However, DCT contended that the sale of software amounts to sale of goods and quoted the Supreme Court directions in Tata Consultancy Services vs Union of India in 2006.

The Court observed: “It is a question of fact and needs to be examined by the fact-finding authorities. Since it involves only question of fact whether it is sale of goods or sale of service, it does not warrant any entertainment before this Court.”

The Court also said there is no extraordinary circumstances to entertain this writ petition.

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