M/s. Google India Pvt. Ltd. Vs DCIT (ITAT Bangalore)
The present stay petition is filed seeking further extension of the stay of demand. Admittedly there is change of the circumstances from the first stay order, since this Tribunal had disposed of the appeal involving identical issue for earlier years against the assessee. Therefore, the principle that in absence of change of circumstances and the delay in disposal of appeal is not attributable to the assessee-company, stay should be extended, is not applicable to the present case.
The only ground on which learned counsel for the assessee is seeking extension of stay of demand is that he is proposing to appeal against the recent orders of the Tribunal for earlier years before the Hon’ble High Court and also intends to file Misc. Application before this Tribunal. In our considered opinion, this cannot be a valid ground for stay of demand. Unless and until, the orders passed by an appellate authority are reversed by the higher appellate authority or reviewed by its own, the orders passed shall hold the field and shall be binding on both the parties.
O R D E R
Per INTURI RAMA RAO, AM :
This stay petition is filed by the assessee seeking extension of stay of demand of Rs.59,42,20,422/- for the assessment year 2013- 14. The demand in question had arisen on account of TDS officer holding the assessee as “the assessee in default” for non-deduction of tax in respect of payment made by the assessee to Google Ireland Ltd., as the same was in the nature of royalty both under the provisions of domestic law as well as under DTAA between India and Ireland in the order passed by the TDS officer u/s 201(1) & 201(1A) of the Income-tax Act, 1961 [hereinafter referred to as ‘the Act’ for short] dated 22/01/2014.
2. Learned counsel for the assessee sought stay of demand on the following grounds:
i. Appeal already posted for hearing for 23/11/2017
ii. Order of the Tribunal passed for earlier years is yet to be received by the assessee-company
iii. It is proposed to make payment of Rs.100 crores on or before this month end against demand raised in earlier years confirmed by this Tribunal.
On the other hand, learned Departmental Representative vehemently opposed the stay of demand in dispute as the issue in appeal is covered against the assessee-company by orders of this Tribunal for earlier years.
3. We heard rival submissions and perused the material on record. The assessee-company is seeking extension of stay of demand of Rs.59,42,20,422/-. This demand had arisen on account of treating the payment made by the assessee-company to Google Ireland Ltd., as payment in the nature of royalty both under the provisions of domestic law as well as under DTAA between India and Ireland. Admittedly, this issue is covered against the assessee by recent orders of this Tribunal. The stay was earlier granted by this Tribunal vide order dated 31/10/2014 in SP No.210/Bang/2014, subject to payment of Rs.70 crores out of total demand of Rs.129,42,20,422/-. This stay was extended for further period of six months vide order dated 01/05/2015 in SP No.63/Bang/2015. This stay was further extended for a period of 3 months vide order dated 23/12/2016 in SP No.256/Bang/2016. This stay was again extended for a further period of 3 months vide order dated 31/03/2017 in SP No.74/Bang/2017. The stay was further extended up to 31/10/2017 vide order dated 03/08/2017 in SP No.119/Bang/2017. The present stay petition is filed seeking further extension of the stay of demand. Admittedly there is change of the circumstances from the first stay order, since this Tribunal had disposed of the appeal involving identical issue for earlier years against the assessee. Therefore, the principle that in absence of change of circumstances and the delay in disposal of appeal is not attributable to the assessee-company, stay should be extended, is not applicable to the present case. This would revert to the position of the first stay application.
4. In the original stay petition, this Tribunal granted stay of demand subject to payment of Rs.60 lakhs considering the prima facie case in favour of the assessee-company. Now, in light of recent order of this Tribunal in assessee’s own case, the issue in appeal is covered against the assessee-company. Therefore, it cannot be said that there is prima facie case in favour of assessee. The Hon’ble Apex Court, in the case of Asst. Central Excise vs. Dunlop India Ltd., (154 ITR 172) laid down the following three para meters to be taken into consideration at the time of grant of stay of demand by the appellate authorities:
i. Existence of prima facie case
ii. Financial hardship, and
iii. Irreparable injury and balance of convenience.
The Hon’ble Supreme Court held as follows in para.6:
“6………..All this is not to say that interim orders may never be made against public authorities. There are, of course, cases which demand that interim orders should be made in the interests of justice. Where gross violations of the law and injustices are perpetrated or are about to be perpetrated, it is the bounden duty of the Court to intervene and give appropriate interim relief. In cases where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizen’s faith in the impartiality of public administration, a Court may well be justified in granting interim relief against public authority. But since the law presumes that public authorities function properly and bona fide with due regard to the public interest, a Court must be circumspect in granting interim orders of far-reaching dimensions or orders causing administrative, burdensome inconvenience or orders preventing collection of public revenue for no better reason than that the parties have come to the Court alleging prejudice, inconvenience or harm and that a prima facie case has been shown. There can be and there are no hard and fast rules. But prudence, discretion and circumspection are called for. There are several other vital considerations apart from the existence of a prima facie case. There is the question of balance of convenience. There is the question of irreparable injury. There is the question of the public interest. There are many such factors worthy of consideration……….”
Again vide para. 9 held as follows:
“9. ……………Even assuming that the company had established a prima facie case, about which we do not express any opinion, we do not think that it was sufficient justification for granting the interim orders as was done by the High Court. There was no question of any balance of convenience being in favour of the respondent- company. The balance of convenience was certainly in favour of the Government of India. Governments are not run on mere bank guarantees. We notice that very often some Courts act as if furnishing a bank guarantee would meet the ends of justice. No Governmental business or for that matter no business of any kind can be run on mere bank guarantees. Liquid cash is necessary for the running of a Government as indeed any other enterprise. We consider that where matter of public revenue are concerned, it is of utmost importance to realize that interim orders ought not to be granted merely because a prima facie case has been shown. More is required. The balance of convenience must be clearly in favour of the making of an interim order and there should not be the slightest indication of a likelihood of prejudice to the public interest…….”
In the present case, learned counsel for the assessee fairly admitted that none of the above para meters laid down by the Hon’ble Apex Court in the case of Dunlop India Ltd. (supra) are met. The only ground on which learned counsel for the assessee is seeking extension of stay of demand is that he is proposing to appeal against the recent orders of the Tribunal for earlier years before the Hon’ble High Court and also intends to file Misc. Application before this Tribunal. In our considered opinion, this cannot be a valid ground for stay of demand. Unless and until, the orders passed by an appellate authority are reversed by the higher appellate authority or reviewed by its own, the orders passed shall hold the field and shall be binding on both the parties. Even on the proposed action to file rectification application before this Tribunal, it is hypothetical situation since the appellant had not yet filed any Miscellaneous Petition before this Tribunal. Even assuming that any such petition is filed, scope and ambit of all such applications is very limited and having regard to the decision of the Hon’ble jurisdictional High Court in the case of CIT vs. McDowell & Co. Ltd., (2004)(269 ITR 451)(Kar), in proceeding u/s 254(2), the Tribunal is not empowered to change the final outcome of the appeal. The relevant paragraph of the judgment is reproduced below:
“9. We have given our anxious consideration to the issue. Section 35(1)(e) provides that with a view to rectifying any mistake apparent from the record, the Tribunal may amend any order passed by it under section 24. Sub-section (5) of section 35 provides that where an amendment is made under section 35, an order shall be passed in writing by the Tribunal. The power vested in the Tribunal, by section 35, is only to amend the order, to rectify any mistake apparent from the record and not to review its order. Section 35 also clearly states the mistake should be rectified by amending the original order. Therefore, rectification presupposes the continued existence of the original order. When an amendment is made to the original order, the amendment merges with the original order. The original order is read with the amendment thereto. If the power to rectify the original order by way of amendment to that order is to be interpreted as permitting recalling of the original order, then the original order ceases to exist and a fresh original order is made. Recalling the original order involves rehearing of the matter which is not the purpose and intention of the provision for rectification. When the wording of the statutory provision are clear and unambiguous and can be given effect without any difficulty, it is not permissible to give an extending meaning to the provision. The words “amended the original order to rectify any mistake apparent from the record” does not mean recall the original order, rehear the matter and replace the original order by a fresh order. The purpose can be achieved by continuing the original order and passing an amendment order stating whatever is necessary to rectify the mistake apparent from the record. Whether the issue involved is one or more makes no difference, as what is contemplated and provided for is an amendment to the original order and not an order in substitution of the original order.”
Thus having regard to the above legal position, the assessee-company had not made out a case for stay of the demand. In the circumstances, the stay petition seeking extension of stay is not maintainable and is accordingly dismissed.
5. In the result, the stay petition is dismissed.
Order pronounced in the open court on 07th November, 2017