DCIT (International Taxation) Vs Belgacom International Carrier Services Sa Belgium (Supreme Court of India)
The matter before the Supreme Court arose from a Special Leave Petition filed by the Revenue challenging a Karnataka High Court decision concerning the taxability of interconnect service charges paid to foreign telecom operators. The Supreme Court, after hearing the learned Additional Solicitor General, noted that there was a substantial delay of 390 days in filing the petition. The Court found that this delay had not been satisfactorily explained. On this ground alone, the petition was liable to be dismissed.
Read HC Judgment in this case: Interconnect Charges Not Royalty: HC Dismisses Revenue Appeal
Apart from the delay, the Supreme Court also examined whether there was any justification to interfere with the impugned order of the High Court. It concluded that no valid ground existed to warrant such interference. Accordingly, the Special Leave Petition was dismissed both on account of delay and on merits. All pending applications were disposed of.
The underlying dispute before the High Court concerned whether interconnect service charges paid would qualify as “royalty” for tax purposes. The High Court considered this issue in light of an earlier decision rendered by a Co-ordinate Bench in ITA No.160/2015 and connected appeals, decided on 14.07.2023. In that judgment, the Co-ordinate Bench had specifically addressed whether payments made to non-resident telecom operators for providing interconnect services and transfer of capacity in foreign countries could be treated as royalty.
