GST Collected by Non-Resident Co. Not Included in Gross Receipts for Income Computation u/s 44BB | ITAT

Case Details: Oceaneering International GMBH vs. Deputy Commissioner of Income-tax (International Taxation) - [2025] 173 taxmann.com 313 (Mumbai-Trib.)

Judiciary and Counsel Details

• Amit Shukla, Judicial Member & Vikram Singh Yadav, Accountant Member
• Abdul Kadir Jawadwala, for the Appellant.
• Krishna Kumar, Sr. DR for the Respondent.

Facts of the Case

The assessee, a non-resident Swiss company, provides equipment and services for oil and gas drilling operations in India. It filed its return of income for AY 2021–22 under the presumptive scheme of Section 44BB, offering gross receipts of Rs. 92.44 crores.

Rs. 13.10 crores in goods and service tax (GST) collected from customers was not included in gross receipts, as the assessee claimed it was collected in a fiduciary capacity on behalf of the Government.

Assessing Officer (AO), relying on Section 145A and certain judicial precedents, included GST in gross receipts under Section 44BB and made additions accordingly.

Dispute Resolution Panel (DRP) upheld the AO’s view. The matter reached before the Tribunal.

ITAT Held

The Mumbai Tribunal held that GST is a statutory levy collected on behalf of the Government and does not represent the assessee’s income. It cannot be treated as part of gross receipts for the purposes of computing deemed income under Section 44BB. Section 44BB overrides general provisions, and income should only be computed on amounts received for services and not taxes collected.

The Tribunal distinguished GST from business receipts, emphasised its fiduciary nature, and applied the principle that including GST in the assessee’s income would amount to taxing a tax. It also followed the decisions of Coordinate Benches and held that GST, shown as a separate line item in invoices, must be excluded from gross receipts.

Accordingly, the tribunal directed the deletion of the addition of Rs. 13.10 crores towards GST.

List of Cases Reviewed

• Orient Overseas Container Line Limited v. DCIT (International Taxation) in ITA no. 3278/MUM/2023
• Seadrill International Ltd. v. ACIT (IT)-4(2)(1) in ITA No. 4700/MUM/2023 dated 07.01.2025 [Para 12] followed.

List of Cases Referred to

• CIT v. Knight Frank (India) (P.) Ltd. [2016] 72 taxmann.com 300/242 Taxman 313 (Bombay) (para 6)
• Sedco Forex International Inc. v. CIT [2017] 87 taxmann.com 29/251 Taxman 459/399 ITR 1 (SC) (para 6).