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Genpact India Private Limited v. Deputy Commissioner of Income Tax

Civil Appeal · 2019 INSC 1277Decided 22 Nov 2019
Civil Appeal No. 8945 of 2019
Justice Uday Umesh Lalit · Justice Indira Banerjee

Background

Genpact India bought back shares from its sole shareholder in 2013 for about Rs. 800 crore. The tax department sought to tax this buyback under the newly-inserted Section 115QA of the Income Tax Act, and Genpact challenged this by filing a writ petition in the Delhi High Court instead of pursuing the ordinary statutory appeal route, after obtaining an interim order. The High Court dismissed the writ petition, holding that Genpact should pursue its appellate remedy, while recording certain concessions by the tax department to protect Genpact's interests on appeal. Genpact appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that merely because a High Court had earlier entertained a writ petition and granted an interim order does not mean the matter can never be dismissed later on the ground of an available alternative remedy: that principle cannot be stretched into an absolute bar on dismissal for alternative remedy once a petition is admitted. The Court found no error in the High Court's approach, noting that the concessions recorded by the tax department protected Genpact from any prejudice. It specifically declined to decide the substantive question of whether the buyback fell within Section 115QA, leaving those issues to be examined by the appellate tax authorities. The appeal was dismissed, with the Court directing that Genpact's pending statutory appeal (filed in 2019) now proceed in accordance with law.

Lesson Learnt

Courts strongly prefer that tax (and other) disputes go through the statutory appeal process rather than bypass it via a writ petition, even if a writ petition was initially allowed to proceed with an interim order: admission of a writ petition does not guarantee it will be decided on merits if an adequate alternative remedy exists.

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

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