Relief for MasterCard from 'Google Tax'! No need to pay equalisation levy, says Delhi HC

The Delhi High Court has offered relief to MasterCard by dismissing a case related to payment of equalisation levy. India's Revenue Department told the court that it had accepted MasterCard had a permanent establishment in India, and was not liable to pay equalisation levy. The court disposed off the case after listening to the Revenue Department's take on the matter.

The equalisation levy, also popularly known as Google Tax, is charged on revenues earned on online transactions from India by companies which are not based in India.

The revenue department said that it has no desire of collecting equalisation levy in respect of income on which tax has already been paid by MasterCard either by way of TDS or advance tax.

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Based on revenue department's statement, the high court said that the issue stands resolved and hence it disposed off the case.

It is to be mentioned here that the MasterCard filed a writ petition against the stand of advance ruling authority which says that MasterCard has a fixed permanent establishment in India, and hence it should pay tax on income earned here.

Even as it is contesting the AAR's stand on its PE status, it had filed a miscellaneous petition seeking stay on paying equalisation levy as a precautionary measure so that it does not have to pay both the income tax as well as equalisation levy.

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The revenue department contended that in case MasterCard succeeds in the writ petition, it would be eligible to receive refund along with statutory interest, and only then it would be liable to pay equalisation levy with interest.

Himanshu Sinha, tax partner in law firm Trilegal, who was one of the lawyers who represented the revenue department in the case, said that MasterCard, based on its own stand that it is not a PE in India, thought they might be asked to pay equalisation levy. As a precautionary measure, therefore, they moved the High Court against the payment of the levy over and above the income tax it had paid.

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