MasterCard has moved the Delhi supreme court seeking a stay payment of equalization levy on digital transactions on grounds that it might result in double taxation.
Singapore-based MasterCard Asia Pacific Ltd. said that per an Authority of Advance Ruling (AAR) order of June 2018 in favour of the taxation department, the corporate had a permanent establishment in India and was, therefore, paying revenue enhancement in line with the order.
In India under Article 5 of the India-Singapore Double minimization Agreement in respect of services, the Delhi AAR had ruled that Mastercard had fixed place, service, and dependent agent permanent established. while employing a global network and infrastructure to process card payment transactions for purchasers in India.
The company has challenged the AAR’s ruling and also the matter is pending. Since the tax is already being paid, equalization levy can’t be sought because it would cause double taxation,” a lawyer representing the corporate told ET, asking to not be identified.
The company stated Section 165A (2) (i) of the taxation Act, which states that the levy isn’t payable when a permanent establishment exists. Senior lawyer Harish Salve is arguing the case for MasterCard, being heard by the division bench of Justice Manmohan and Justice Sanjeev Narula.
The Delhi supreme court has issued a notice to the taxation department and can hear the case on August 18. India began imposing an equalization levy of twenty-two on purchases through foreign e-commerce platforms with access to the domestic market from April 1. Since 2016 An equalization levy, Google Tax, was already imposed on digital advertising at 6 percent
Experts said that while other e-commerce companies have sought clarity from the govt. on the applicability of the levy, true for MasterCard is exclusive because it was in a roundabout way challenging the equalization levy.
Amit Maheshwari, tax partner at AKM Global said that The MasterCard has already challenged the ruling of AAR, which stated that it’s a PE in India and also the matter is sub-judice, it’s a peculiar situation wherein the levy are subject to the result of the petition which is pending with the Delhi judicature and he also mentioned that in India provides MasterCard has pro-actively collection of the levy on services.
