On the merits of the matter, Salve argued that the processors perform only preliminary validation and routing. The principal revenue-generating work is undertaken through servers outside India, he said.
“What are you paying me for? You are paying me for processing these transactions at my headquarters. That is what the money is for. Not for giving you a MIP so that you can connect to me,” he said.
He added that even an essential function could remain preparatory or auxiliary and, therefore, fall outside the definition of a permanent establishment.
“Essentiality is not the test. The test is the nature of the act,” Salve said.
The hearing is expected to go on for the rest of the week.