Bombay High Court declines to hear Hindustan Unilever on tax demand

India’s Bombay High Court today dismissed a writ petition filed by Hindustan Unilever Limited concerning non-deduction of income tax on payment of INR 30.45 billion made to GlaxoSmithKline Consumer Healthcare towards acquisition of certain brands.

The leading FMCG maker had earlier disclosed that it received an INR 9.7 billion tax notice from the Income Tax Department in relation to the said acquisition.

As per the Income Tax Department, the sum remitted by Hindustan Unilever Limited was subject to deduction of tax under section 195 of the Income Tax Act. Because there was a failure to deduct the tax, proceedings under section 201 of the Income Tax Act were initiated treating Hindustan Unilever Limited as “assessee-in-default”.

The company contended before the Bombay High Court that the Department had failed to apply the principle laid down by the Delhi High Court in an earlier decision. In that decision, the Delhi High Court had ruled that the situs of a trademark shall be the situs of the owner.

The company contended that the owner of the brands in the instant case was not situated in India and therefore no sum is chargeable to tax in India under section 9 of the Income Tax Act.
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The Bombay High Court, in a decision pronounced today, declined to entertain the petition in exercise of its extraordinary writ jurisdiction. The court said that Hindustan Unilever Limited has an alternate remedy by way of appeal and must pursue that remedy.