January 31st, 2014, United
States multinational Google has submitted to
Delhi High Court that it is not liable to pay any taxes in India
for its internet activities, as it is not providing any taxable services or
earning income from here nor does it have a permanent establishment in the
country. The submission has been made in an affidavit filed by the website in
the High Court which is hearing a plea by a former BJP leader seeking
protection of children from online abuse and recovery of taxes from the
websites on their income from operations in India.
The website’s claim has been opposed by the petitioner, KN Govindacharya, who
in his affidavit has contended that sites like Facebook and Google are liable
to pay taxes as they generate huge revenue through agreements with Indian
advertisers as well as sale of games and applications to internet users here.  The case is slated to be heard tomorrow by a
bench headed by Justice B D Ahmed. Google India has contended in its affidavit
that it “is not providing any taxable services in India, neither has a
permanent establishment in India nor is it earning any income which is arising
from or accruing in or deemed to be arising or accruing from India. “Furthermore,
Google is not receiving any payment in the nature of ‘royalty’ which may be
taxable either under the relevant Indian laws or under the Double taxation
Avoidance Agreement between India
and USA.”
In his affidavit filed through advocate Virag Gupta, Govindacharya has alleged
that the website has “incorrectly” submitted before the court that no
tax is payable by them in India.
Govindacharya has also alleged that the tax department has “failed to
initiate penal provisions” or “demanded the outstanding taxes for
previous year(s)” from the websites “which has caused irreparable
loss to the Indian economy and exchequer.”