The Karnataka high court has directed IT bellwether Wipro Ltd to deposit Rs 24 crore (Rs 240 million) by Wednesday evening in a case of tax on re-export of software, a company official admitted. As the company did not comply with the court’s order of December 10, the vacation bench of justice Venugopala Gowda and justice BV Pinto on Tuesday declined to hear its appeal for a stay on payment of 4% value added tax (VAT) on software re-exported.
In the earlier order, a single-judge bench of the court directed the export division of Wipro to pay 50% of the VAT and file an appeal before the appellate authority for commercial taxes by December 24 for tax exemption.
When the company failed to pay the amount and appeal within the fortnight, the commercial tax department attached its bank accounts and moved the high court against it.
The company official declined to comment on the court directive, saying the “case is sub-judice and our legal experts are dealing with the issue.”
Wipro sought tax relief on software it developed for other vendors, which in turn exported it to the IT company.
“The company failed to submit the statutory H-form to the department for claiming tax exemption,” a tax official said on anonymity.
Wipro challenged the tax department for levying the export tax on the software and sought exemption as it was paying service tax under the development of software act, and approached the court for quashing the department notice Oct 26.
Rejecting the company’s appeal, the tax department contended before the high court that the sale of software amounted to sale of goods and services and cited a Supreme Court ruling in 2006 in a similar case between the central government and Tata Consultancy Services (TCS), the country’s largest IT bellwether.