PNP 1 CAWL28344-20.10 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPLICATION (LODG.) NO.28344 OF 2011 IN WRIT PETITION NO.1508 OF 2011 MSM Satellite (Singapore) Pte. Ltd. ..Petitioner. vs. The Union of India and others ..Respondents. …. Mr. Prakash Shah with Mr. Jas Sanghavi i/b PDS Legal for the Applicant / Petitioner. Mr. B.M. Chatterjee for the Respondents. .... CORAM : DR.D.Y.CHANDRACHUD & A.A. SAYED, JJ. 20 October 2011 P.C. : 1. In this Civil Application the Applicant, who is the original Petitioner, seeks recall of the order passed by this Court on 28 September 2011 and permission to unconditionally withdraw the Writ Petition with liberty to show cause against notices dated 11 June and 14 December 2010 issued by the Second Respondent. 2. The Petition was originally filed in order to challenge notices issued by the Deputy Commissioner of Income Tax (International Taxation -1(2) calling upon the assessee to show cause as to why it should not be treated as an assessee in default for failure to deduct tax on PNP 2 CAWL28344-20.10 a payment of Rs.125 Crores made to M/s. World Sport Group (Mauritius) Ltd. as a facilitation fee under the facilitation agreement dated 25 March 2009. It is alleged that the Petitioner breached its obligation to deduct tax under Section 195 of the Income Tax Act 1961 and is hence, liable to be treated as an assessee in default under Section 201 and 201(1A). The notices were impugned in the writ proceedings . 3. During the course of hearing, counsel appearing on behalf of the assessee had submitted that the Petitioner would contest the jurisdiction of the Second Respondent to issue the show cause notices and in terms of an order of the Supreme Court dated 23 June 2009 on a similar issue relating to the construction of Section 195 in Vodafone International Holdings B.V. v. Union of India1, sought a direction from the Court to that effect. Accordingly, this Court had directed that the Deputy Commissioner of Income Tax (International Taxation) shall in the first instance determine the question of jurisdiction as a preliminary issue and pass a reasoned order after furnishing an opportunity of being heard to the Petitioner. Counsel appearing on behalf of the Petitioner had also stated that in the meantime, the Petitioner had deposited an amount of Rs. 300 Crores in the registry of this Court in terms of an order passed on 17 September 2010 by a Division Bench in certain other proceedings between MSM Satellite (Singapore) Pte. Ltd. v. World Sport Group (Mauritius) Limited (Appeal (L) 534 of 2010). Learned counsel has made a statement before the Court that in order to secure the Respondents and in the event that the aforesaid amount was directed to be refunded to the Petitioner, the Petitioner would not withdraw the amount from the 1 (2009) 179 Taxman 129(SC). PNP 3 CAWL28344-20.10 registry of this Court without prior notice of atleast two weeks. This statement was also recorded. 4. The Civil Application has now been taken out for recall of the order and for permitting the Petitioner to unconditionally withdraw the Writ Petition. At the hearing of the Civil Application, counsel appearing on behalf of the Petitioner states that the Petitioner seeks to withdraw the second sentence in paragraph 4 of the application and paragraph 5 of the Civil Application. Leave to amend is accordingly granted. 5. Since the Petitioner proposed to unconditionally withdraw the Petition without seeking to raise the issue of jurisdiction as a preliminary issue, we were of the view that it would be appropriate if counsel appearing on behalf of the Revenue is allowed some time, as sought, in order to take instructions. An affidavit has been filed by Mr. D.K. Mahajan, Assistant Director of Income Tax (International Taxation – 4(1) Mumbai on 10 October 2011 stating as follows : “1. It is found that vide its affidavit dated nil October 2011, the Petitioner has conveyed that the Petitioner is desirous of unconditionally withdrawing the above Writ Petition and submitting itself to respond to the notices issued by Respondent No.2. Therefore, I understand that the Petitioner is subjecting itself to the jurisdiction of A.O. and avail remedies under Income Tax Act if the order of A.O. is adverse. 2. In view of the above, Respondent No.,2 has no objection to the unconditional withdrawal of the Writ Petition. The Respondent No.2 also prays that this Hon’ble Court permits the Respondent to proceed further in the matter within the powers given to him by the Income-tax Act 1961 and in light of the facts and materials already on record and also further facts and materials which may come on record during the proceedings before the Respondent.” PNP 4 CAWL28344-20.10 6. Though the affidavit was filed before the Civil Application was formally taken on the record, counsel appearing on behalf of the Revenue states that the affidavit may be treated as an affidavit in response to the Civil Application. The deponent of the affidavit is also personally present before the Court. 7. In our view, since the Petitioner now seeks to unconditionally withdraw the Writ Petition, there should be no objection to permitting it to do so. In the earlier order of this Court, the Court had on the statement of the counsel appearing on behalf of the Petitioner recorded that an amount which was deposited by the Petitioner in certain other proceedings would not be withdrawn even if permission was granted, without notice to the Union of India. Counsel appearing on behalf of the Revenue does not seek the continuance of that direction, in view of the fact that the Petitioner is unconditionally withdrawing the Petition and has agreed to show cause to the notices without raising the issue of jurisdiction as a preliminary issue. Accordingly, we clarify that it will be open to the Petitioner to show cause to the notices issued by the Second Respondent within a period of three weeks from today. The Second Respondent would pass a composite order without treating the issue of jurisdiction as a preliminary issue in terms of the agreed statement before the Court. In terms of the request made to the Court in paragraph 2 of the affidavit of the Assistant Director of Income Tax (International Taxation) and as prayed before the Court by counsel appearing on behalf of the Petitioner, we (i) recall the earlier order dated 28 September 2011; (ii) permit the Second Respondent to proceed further in the matter in accordance with the provisions of the Income Tax Act 1961; and (iii) dismiss the Petition as unconditionally withdrawn. PNP 5 CAWL28344-20.10 The Civil Application is accordingly disposed of. (Dr. D.Y. Chandrachud, J.) (A. A. Sayed, J.)