The main legal point established in the judgment is the validity of the provisional attachment order under Section 281B of the Income Tax Act to protect the interests of the Revenue and the direction to FOWC to deposit the amount received under the LCs to secure the tax liability.

JUDGMENT :

A.K. Sikri, J.

Leave granted.

2. The parties in these proceedings are Income Tax Department (Union of India), Formula One World Championship Limited (FOWC), which is a U.K. Company, Jaypee Sports International Limited (Jaypee), an Indian Company, Axis Bank, which is an Indian Bank, Lloyds Bank, an international Bank incorporated in U.K. and Royal Bank of Scotland (RBS), another international Bank incorporated under U.K. laws. These three appeals are filed by RBS, Lloyds Bank and Axis Bank in which other parties are impleaded as respondents. Therefore, for the sake of clarity and to avoid confusion, it would be apt to refer these parties by their aforesaid names, rather than addressing them as appellants or respondents.

3. Though the nature of grievances of the three appellants in these three appeals is different, the root cause thereof is the same. The issues raised in these appeals have arisen as a result of income tax liability which was disputed by the FOWC (or, for that matter, by Jaypee as well, albeit at the behest of FOWC) in respect of income earned by FOWC in India for conducting Formula One races in India, as a result of contractual arrangement between FOWC and Jaypee. Though, it was disputed by FOWC as well as Jaypee that the income generated for conducting such races is not exigible to tax in India because of the provisions contained in Double Taxation Avoidance Agreement (DTAA) between India and U.K., the said controversy has been put to rest by this Court in Civil Appeal Nos. 3849 of 2017, 3850 of 2017 and 3851 of 2017 decided by this Court vide common judgment dated April 24, 2017. Before we advert to the disputes involved in these appeals, a brief background of the dispute which led to the aforesaid judgment would be necessary.

4. FOWC and Jaypee entered into a Race Promotion Contract (RPC) and Artwork License Agreement (ALA), as amended from time to time, under which Jaypee was granted rights to host and promote the Formula One Grand Prix of India to be held at the Buddha International Circuit, Noida and was also given rights to use certain intellectual property for facilitating the organisation of Formula One Grand Prix in India for the consideration and upon the terms and conditions stated therein.

5. In order to secure the consideration due and payable to FOWC under the RPC, the Axis Bank, at Jaypee's request, opened four Standby Letters of Credit (LCs) in favour of FOWC which were confirmed by RBS and Lloyds Bank (collectively referred as 'Confirming Banks') for a total sum of 51.35 million US Dollars. These LCs provided that English Law will apply and English Courts will have the jurisdiction. The Formula One race was organised in India for the years 2011, 2012 and 2013. Jaypee made certain payments under the aforesaid arrangements without deducting tax in India. In order to get clarity on issues of income tax payable on the income generated in India, both, FOWC and Jaypee filed References before the Authority for Advance Rulings (AAR). During the pendency of the References before AAR, the Tax Department passed an order dated March 10, 2014 under Section 281B of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') provisionally attaching the consideration payable by Jaypee to FOWC under the RPC and ALA.

6. Upon Jaypee informing the Tax Department that it had submitted irrevocable LCs in favour of FOWC towards payment of the consideration due under the RPC/ALA, the Tax Department by a letter dated March 21, 2014 informed the Reserve Bank of India (RBI) about the aforesaid attachment order passed by it and requested RBI to take action to ensure compliance of the said attachment order. Axis Bank was also sent the copy of that letter dated March 21, 2014. Acting upon the request of the Tax Department and in view of the aforesaid Attachment Order, RBI by its letter dated April 2, 2014, int