In this petition filed in the court of Judge S Sunil Dutt Yadav, the tax department, dealing with the petitioner's objection to assumption of jurisdiction, concluded that cryptocurrencies are "goods" and therefore subject to tax. says the report citing sources.
The petitioning company executes orders to buy or sell cryptocurrencies on a third-party platform for its clients. It does not function as a cryptocurrency exchange where transactions actually take place.
However, the tax department claimed that the company is a facilitator for section 194-O and a buyer-seller for sections 194Q and 206C (1H).
Article 194-O obliges e-commerce operators to deduct a certain amount of tax from the sums payable to e-commerce participants to sell goods or provide services provided through their digital or electronic platform.
Pursuant to section 206C (1H), the seller is required to collect a specified amount as tax from the buyer of goods in relation to the consideration for the sale of goods in excess of Rs50 lakh. Also, under section 194Q, the buyer is required to deduct a specified amount of tax from the consideration payable to the seller for the purchase of goods in excess of Rs 50 lakh.
Citing a Supreme Court ruling, where the high court rejected the argument that cryptocurrencies are only goods or merchandise, the company maintains that the tax department's conclusion contradicts the SC ruling.
The company also contends that the initiation of the TDS proceedings lacks jurisdiction because the time to file its tax return (ITR) had not expired when the tax department issued an order that considered the petitioning company to be assessed in absentia.
In addition, the company maintains that "the proceedings were hastily initiated and are an exercise of colorable power that has resulted in undue harassment of the evaluator, since the regulatory law for cryptocurrencies has not yet been enacted," the report says.
