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Don't Burden Courts Unnecessarily, SC Tells Centre as 2 Govt Bodies Fight Over Taxing Internet Exchange

The top court was moved by the Commissioner of Income Tax (Exemptions), trying to impose an additional tax liability on the National Internet Exchange of India, a government non-profit company.

Utkarsh Anand | CNN-News18

Updated:November 2, 2019, 9:01 AM IST
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Don't Burden Courts Unnecessarily, SC Tells Centre as 2 Govt Bodies Fight Over Taxing Internet Exchange
The Supreme Court of India. (News18 Creative)

New Delhi: Why should the courts be burdened when the question is only about the money going from one pocket of the government to another? The Supreme Court has asked the central government to apply its mind to this issue and come up with a better litigation policy.

A bench of Justices Sanjay K Kaul and KM Joseph expressed their displeasure over one arm of the government fighting it out with another without there being any substantial question of law or any tacit benefit to the government in the end.

“We consider it appropriate to call upon the Union of India to examine this issue specially keeping in mind the professed litigation policy not to burden the judicial system unnecessarily,” held the bench while asking for a reply within four weeks.

The top court was moved by the Commissioner of Income Tax (Exemptions), trying to impose an additional tax liability on the National Internet Exchange of India.

The National Internet Exchange of India (NIXI) is a government non-profit company, which was established in 2003 to provide neutral Internet Exchange Point services.

In its April 2019 judgment, the Delhi High Court had ruled that the purpose of NIXI was charitable and regulatory in nature since it provides basic services by way of domain name registration, for which it charges subscription fee on annual basis and also collects connectivity charges.

It dismissed the plea by Revenue to impose a total tax liability of Rs 11.4 crore on NIXI after noting that the subscription charges cannot be considered as a commercial activity since NIXI is the only nationally designated entity entitled to allocate domain names to its applicants who seek it in India and is also authorised to assign “.in” registration and domain names in terms of central government’s mandate in 2004.

The Revenue challenged this order before the apex court. But the bench of Justices Kaul and Jospeh disapproved of this practice, and noted that such an appeal has been filed although there has been a consistent view adopted by Commissioner of Income Tax (Appeals), Income Tax Appellate Tribunal and the Delhi High Court in the present case.

“The respondent is a government company. It amounts to money going from one pocket to another yet the judicial system is burdened,” lamented the court.

It told Additional Solicitor General KM Natraj, appearing for Revenue, that the litigation policy will require a relook so that courts are not burdened unnecessarily.

“On examination the decision be placed before us. List after four weeks by which time we expect administrative decision will be taken in this behalf,” stated the court order.

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