LegalAware
LegalAware.ai
EMPOWERING LEGAL AWARENESS

Director of Income Tax (IT)-I v. A.P. Moller Maersk A/S

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 8040 of 2015)Decided 17 Feb 2017
Civil Appeal No. 8040 of 2015
Justice A.K. Sikri · Justice Abhay Manohar Sapre

Background

A.P. Moller Maersk A/S, a Danish shipping company, maintained a global IT and communications system called "Maersk Net" that its local agents around the world (including in India) used for cargo tracking, documentation, and scheduling, sharing its running costs on a pro-rata basis. The Indian Income Tax Department argued that the payments Indian agents made to the company for using this system were "fees for technical services" and therefore taxable in India, while the company said these were merely reimbursement of shared infrastructure costs tied to its core shipping business. The Income Tax Appellate Tribunal and the Bombay High Court both ruled in the company's favour, prompting the tax department to appeal to the Supreme Court across several connected cases raising the identical question.

Decision Breakdown

The Supreme Court held that the Maersk Net system was simply a shared facility available to all of the company's agents worldwide, not a bespoke technical service tailored to any particular agent's special needs, and relying on its own earlier ruling in Kotak Securities, it reiterated that a common facility offered to all users (as opposed to an exclusive, customised service) does not qualify as "technical services" under the Income Tax Act. Since neither the Assessing Officer nor the appellate authorities had ever found any profit element in what the agents paid, the payments were genuine cost reimbursements integral to the shipping business, and therefore protected income under the India-Denmark DTAA rather than taxable fees. The Court also refused to let the Revenue raise an entirely new "royalty" argument for the first time through written submissions after the hearing had concluded, since that issue was never raised at any earlier stage. All the connected appeals were dismissed as without merit.

Lesson Learnt

When a business shares common infrastructure costs with its own agents or branches, simply paying one's share of the expense for a shared facility is not the same as paying a fee for a customised technical service, and tax authorities cannot introduce a brand-new legal theory for the first time in final written submissions after arguments have closed.

Official source (sci.gov.in)View Judgment (PDF)

More rulings in Tax & Customs Law

Tax & Customs LawSupreme Court of India

Mepco Industries Ltd. v. Commissioner of Income Tax, Madurai

The Supreme Court dismissed the appeal and upheld treatment of this subsidy as a taxable revenue receipt. It applied the purpose test: the scheme had to be read as a whole to determine whether the assistance supported capital investment or the running of an established business. Here, payment tracked actual electricity charges incurred in production and was not earmarked for plant, machinery, factory construction or repayment of capital borrowing. The scheme's broad aim of industrial development did not override those operative features, and payment after production began was relevant to the overall scheme rather than decisive by itself.

Decided 7 Oct 2026Read case
Tax & Customs LawDelhi High Court

M/S Kuku Overseas vs. Commissioner of Customs & Anr.

The Court found the petitioner's non-disclosure of the earlier adjudication order was material, since the core premise of the petition (indefinite non-finalisation) no longer held true once formal orders existed. It held the petitioner now had an effective alternate remedy, a statutory appeal under Section 128(1) of the Customs Act, to raise all its arguments, including about delay, and declined to keep the writ petition pending just because a related Supreme Court case on delay in adjudication was ongoing. The writ petition was dismissed as not maintainable in its present form, with liberty to appeal.

Decided 6 Oct 2026Read case
Tax & Customs LawDelhi High Court

M/s Aparna Collection vs. Union of India & Ors. and connected matters

The Court rejected the argument that limitation under Section 74(2) must be measured from the date on Form GST DRC-01, because DRC-01 is only a summary of the show cause notice. On Section 74(10), the Court held that the statute requires the order, not the DRC-07, to be issued within the prescribed period, and that DRC-07 is a summary uploaded later under Rule 142. Because the petitioner had a statutory alternative remedy of appeal under Section 107, and the questions raised needed factual findings, the Court declined to decide the merits in writ jurisdiction. The petitions were disposed of, with liberty to appeal under Section 107 and to raise all contentions there, including limitation and exclusion of the time spent in these proceedings.

Decided 5 Oct 2026Read case
Tax & Customs LawSupreme Court of India

Additional Commissioner, Commercial Tax & Others v. Cadila Health Care Ltd. & Another

The Supreme Court dismissed the authorities' appeals and upheld the classification accepted by the High Court. It held that, under the statutory entries at issue, classification depended on the goods' form when sold, rather than what customers might later prepare with them. The beverage entry grouped beverages with syrups, cordials, juices and other liquid preparations, and did not expressly include powders used to make drinks. Packaging instructions and general tests of popular meaning or function could not expand that clear statutory description. Because the products did not fit the specific beverage entry, they belonged in the residual category; precedents involving differently worded entries or liquid products did not change that result.

Decided 5 Oct 2026Read case
Tax & Customs LawDelhi High Court

Zoom Insurance Brokers Pvt. Ltd. vs. Assistant Commissioner of Income Tax, Circle 25(1) & Anr.

The Court dismissed the writ petition. Except for the assessment year, the facts were identical to the earlier case, and the Court held that judicial discipline required it to follow the Coordinate Bench's decision in the petitioner's own case. The Court did not accept the petitioner's reliance on an interim order in another company's case, and noted that the earlier judgment in the petitioner's own case was final. The earlier judgment also left it to the Assessing Officer to examine, after the notice is answered, whether the Rs 82 lakh amount is a spurious transaction.

Decided 1 Oct 2026Read case
Tax & Customs LawDelhi High Court

Ms Devi Electronics Pvt. Ltd. vs. Commissioner CGST Delhi South & Ors.

The High Court dismissed the petition. It held that the Commissioner could validly invoke Section 54(11), because an anti-evasion investigation was already underway when the impugned order was passed and the Commissioner had formed an opinion of fraud or malfeasance based on contemporaneous material. The Court held that the power to withhold refund is distinct from the adjudication and appellate scheme under Sections 73, 74 and 107, and that the absence of a statutory appeal does not bar judicial review. However, an appeal had already been filed before the GST Appellate Tribunal (GSTAT), so the Court declined to decide disputed factual questions and left all issues open before the GSTAT.

Decided 1 Oct 2026Read case