IN THE BOMBAY HIGH COURT

K.R. SHRIRAM & NEELA GOKHALE, JJ.

Shell India Markets (P) Ltd. v. UOI

Writ Petition No. 10788 of 2012

1 March, 2024

Petitioner by: Jehangir D. Mistri, Senior Advocate, Madhur Agrawal, Sheeja John, Vaishnavi Malasure & M.P. Savla & Co.

Respondents by: Suresh Kumar.

Neela Gokhale, J.

1. This Petition visits the question pertaining to determination of tax liability of the payments made by Petitioner to its non-resident group company, Shell International Petroleum Company Limited (SIPCL) for availing General Business Support Services ('BSS') under a Cost Contribution Arrangement ('CCA') between Petitioner and SIPCL.

2. On an application made by Petitioner seeking such determination, the Authority for Advance Rulings (Income Tax), New Delhi ('AAR'), by its Order dated 17-1-2012 held that payments made by Petitioner to SIPCL towards BSS under the CCA constitutes income in the hands of SIPCL being in the nature of fees for technical services within the meaning of Article 13.4 (c) of the Double Tax Avoidance Agreement ('DTAA') between India and UK and is chargeable to tax in India. Consequently, AAR held that Petitioner is under obligation to withhold tax under section 195 of the Income Tax Act, 1961 ('the Act').

3. Aggrieved by this Order, Petitioner, by way of the present petition, challenges the validity and legality of the said Order passed by the AAR.

4. Petitioner is a company registered in India under the Companies Act, 1956 and engaged, inter alia, in the business of operating chain of retail fuel stations in India. Respondent no. 1 is the Union of India, Respondent no. 2 is the AAR and the other Respondents are the various officials concerned of the Income Tax department.

5. By way of a CCA dated 1-4-2009 executed between Petitioner and SIPCL, Petitioner avails of BSS provided by SIPCL to all operating companies in its group across the world. The arrangement is that SIPCL manages for consideration its group entities, either directly or through own employees or through its third party affiliates/vendors. The costs incurred are then allocated to Shell entities including SIPCL on a cost to cost basis.