Case Details: DMI Alternatives Pvt. Ltd. Versus Additional Commissioner (Adjudication) (2025) 30 Centax 415 (Del.)
Judiciary and Counsel Details
- Pratibha M. Singh & Rajneesh Kumar Gupta, JJ.
- S/Shri Ajay Vohra, Sr. Adv. & Vishal Kumar, Adv. for the Petitioner.
- S/Shri Shashank Sharma, SSC & Sumit K. Batra, Adv. for the Respondent.
Facts of the Case
The petitioner, an Investment Manager managing an Investment Management Fund (Fund), challenged an order that taxed amounts earmarked for establishment and operational expenses incurred on behalf of the Fund, treating such amounts as consideration for supply of services by the petitioner to the Fund. The petitioner submitted that the annual investment management fee charged for services rendered was distinct from the establishment and operational expenses, which were incurred on behalf of the Fund and should not be considered part of the management fee.
The impugned order equated these expenses with taxable management fees, leading to the dispute. The petitioner’s position lacked consistency over time, having taken different stands regarding whether establishment charges were one-time fees or recurring charges. The matter was brought before the High Court in a writ petition challenging taxability under the CGST Act and Delhi GST Act and the writ petition was filed seeking relief against the tax demand.
High Court Held
The Hon’ble High Court held that the issue concerning whether the establishment and operational expenses incurred by the petitioner constituted part of the management fee taxable under GST is a factual matter requiring detailed examination of the Investment Management Agreement, accounts, and records of the petitioner. The Court observed that questions regarding the nature of expenses, whether they were incurred for payment to the petitioner’s own employees or third-party service providers, and the consistency of the petitioner’s stance, necessitate factual determination beyond the scope of a writ petition.
The Court emphasised that such disputes are to be adjudicated in appeal proceedings rather than writ petitions, noting the impugned order was an appealable order under Section 7 read with Section 9 of the CGST Act and Delhi GST Act. Accordingly, the writ petition was disposed of, leaving the petitioner free to contest the matter through the appropriate appellate process.
