High Court denies relief against notifying Cyprus as jurisdictional area, says can’t question govt’s satisfaction

Case Name:

Expro Gulf Ltd. v. Union of India (High Court of Uttarakhand)

Key Takeaways:

- While exercising writ jurisdiction, the court should not ordinarily look into whether the foreign government actually denied information to Indian authorities.

- There seems no valid reason to disbelieve the satisfaction recorded by Indian authorities for notifying a jurisdiction under Section 94A (of Income Tax Act, 1961).

- Relief of quashing the notification was denied by the court.

Issue:

Whether the court should inquire into the factual basis of the government’s decision to notify Cyprus as a jurisdictional area under Section 94A (of Income Tax Act, 1961) for allegedly not providing information.

Facts:

The petitioners challenged the 1.11.2013 notification declaring Cyprus as a notified jurisdictional area under Section 94A (of Income Tax Act, 1961).

They argued Cyprus was willing to provide information sought by Indian authorities under the tax treaty.

The notification stated Cyprus was not providing information requested under the information exchange agreement.

Arguments:

Petitioners:

Cyprus authorities stated they never denied information and were willing to provide it, so the notification’s basis was wrong.

Revenue:

The court should not question the government’s recorded satisfaction behind the notification.

Key Legal Precedents:

None specifically mentioned.

Judgement:

The court should not ordinarily look into whether the foreign government actually denied information to Indian authorities while exercising writ jurisdiction.

There seems no valid reason to disbelieve the satisfaction recorded by Indian authorities for notifying a jurisdiction.

Consequently, relief of quashing the notification was denied.

The revised tax certificates were also challenged, but the court refused to invoke writ jurisdiction as statutory appeals were available.

FAQs:

Q1. What was the main issue before the court?

A1. The main issue was whether the court should inquire into the factual basis and question the government’s satisfaction recorded for notifying Cyprus as a jurisdictional area under Section 94A (of Income Tax Act, 1961) for allegedly not providing information.

Q2. What was the court’s decision?

A2. The court decided that it should not ordinarily look into whether the foreign government (Cyprus) actually denied information to Indian authorities while exercising writ jurisdiction. It found no valid reason to disbelieve the satisfaction recorded by Indian authorities.

Q3. What relief was sought and what was the court’s ruling?

A3. The petitioners sought to quash the notification declaring Cyprus as a notified jurisdictional area. The court denied this relief, stating it should not question the government’s recorded satisfaction behind the notification.

Since, in all these writ petitions identical questions of facts and law are involved, therefore, with the consent of learned counsel for the parties, all the writ petition are taken up together for hearing and are being decided by this common judgment.

2. By way of present petitions, the petitioner is assailing the notification dated 1.11.2013, Annexure-A to the writ petition), mainly on the ground that "Cyprus" ought not to have been declared as notified jurisdictional area in view of international treaty between Government of India and Government of Cyprus. It is argued by Mr. Ajay Vohra, learned senior counsel appearing for the petitioner that as per Article 28 of the Treaty, the Contracting States are bound to exchange such information (including documents) as is necessary for carrying out the provisions of the Agreement or of the domestic laws of the Contracting States concerning taxes covered by the Agreement. Learned Senior Counsel appearing for the petitioner, would contend that the very basis of issuing the impugned notification dated 1.11.2013 that Government of Cyprus is not cooperating with the Government of India and, despite several requests, not supplying the information sought by the authorities of Government of India, on the face of it, is wrong in view of the Press Release made by the Cyprus Authorities that they have never denied any information and they had been ready and willing to supply the information sought by the Government of India.

3. Bare perusal of the notification dated 1.11.2013 would reveal that Cyprus has not been providing the information as requested by the Indian Authorities under the provisions of Exchange of Information Agreement, therefore, Government of India has decided to notify Cyprus as notified jurisdictional area under Section 94-A (of Income Tax Act, 1961).

4. While exercising the writ jurisdiction under Article 226 of the Constitution of India, this Court ordinarily should not proceed to look into as to whether informations sought by the Indian Authorities were ever declined by the Government of Cyprus or Government of Cyprus is ready and willing to supply the informations sought by the Indian Authorities. Moreover, there seems to be no valid reason to disbelieve the satisfaction so recorded by the Indian Authorities. Consequently, petitions fail for relief No. (a).

5. In the present writ petitions, petitioner is also challenging revised certificate dated 12.12.2014 passed by the Income Tax Authorities. Undisputedly, Income Tax Authorities are competent under Section 154 (of Income Tax Act, 1961) to revise earlier orders passed, even suo moto, if any illegality or irregularity is observed therein, at the subsequent stage. Undisputedly, all orders passed under Section 154 (of Income Tax Act, 1961) can be assailed in statutory appeals.

6. Since, alternative remedy of statutory appeal is available to the petitioner to challenge the revised certificate dated 12.12.2014, therefore, I am not inclined to invoke my writ jurisdiction under Article 226 of the Constitution of India.

7. Learned Senior Advocate appearing for the petitioner contends that appellate forum shall be approached within ten days from today.

8. Mr. Hari Mohan Bhatia, learned counsel appearing for the Income Tax Department/respondent nos. 2 & 3, submits that in case appeals are preferred against the revised certificates, same shall be disposed of in accordance with law without any undue delay.

9. Consequently, all the writ petitions fail and are hereby dismissed.

10. All the CLMAs also stand disposed of accordingly.