The government publishes a draft declaration to be submitted by companies to allow the withdrawal of tax retrocession requests, Telecom News, ET Telecom
This rule had been used to collect an accumulation of Rs 1.10 crore lakh in taxes on 17 entities, including Rs 10,247 crore on Cairn and Rs 22,100 crore on Vodafone.
Cairn was taxed for a 2006 internal reorganization of the Indian company prior to enrolling, while Vodafone was accused of failing to withhold tax at source on the consideration it paid for the acquisition. of Hutchison’s stake in the Indian telecommunications unit.
By eliminating these requests, the government pledged to reimburse Rs 8,100 crore that it had collected from businesses to enforce the tax retrocession request. One volume – Rs 7,900 crore – is owed to Cairn Energy of the UK alone. This was only to be done if the companies concerned agreed to withdraw all pending legal challenges and not to resort to such recourse in the future.
“The amendment brought by law 2021 also provides that the request for the offshore indirect transfer of Indian assets made before May 28, 2012 (including the validation of the request provided for in article 119 of the 2012 finance law) will be canceled if the specified conditions are met.such as the withdrawal or postponement of an undertaking for the withdrawal of an ongoing dispute and the delivery of an undertaking to the effect that no claim for costs, damages, interest, etc. said in a statement.
The amount paid / collected in these cases will be refunded, without any interest, once said conditions are met, he said, adding that a draft commitment is being released for comment.
The declaration provides for “irrevocably withdrawing, discontinuing and not pursuing” any present or future legal challenges against the tax claim.
Cairn and Vodafone had both challenged the retroimposition claim before international arbitration panels which had ruled in their favor. Other companies have also obtained redress from various Indian courts.
In the case of Cairn, the British firm obtained $ 1.2 billion in claims for the value of its shares which were seized and sold by the tax department, dividend seized and tax refund withheld.
The government did not pay, and the company moved jurisdictions such as the United States and France to recover the money owed by seizing the Indian assets.
The new law will require all companies to withdraw Indian challenges and Cairn drops its lawsuits of Indian assets in the United States, France and other foreign countries.
âThe aim of the change made by the 2021 law is to provide tax certainty and to ensure that once the specified conditions are met, the current income tax procedure will be withdrawn, the request, if applicable, raised will be canceled and the amount, if any, collected will be refunded to the taxpayer without any interest, âthe statement said.
To implement the amendment made by the law of 2021, a draft regulation has been prepared to amend the income tax rules of 1962, which specify the conditions to be met and the process to be followed to give effect to the change made by the 2021 law, he said. .
âSuggestions / comments on the draft notification are invited by all stakeholders and the public and can be provided electronically no later than September 4, 2021.â
Nangia Andersen LLP partner Sandeep Jhunjhunwala has said in principle that the draft rule proposes that the taxpayer in the case of whom a specified order has been made be required to irrevocably withdraw, stay and not continue any proceedings. before the court of appeal, including arbitration, conciliation or mediation proceedings and for the execution or continuation of attachments in respect of any award, order or judgment.
âIt is interesting to note that any dispute regarding any of the forms or orders prescribed under these rules would be governed by Indian laws and Indian courts would have exclusive jurisdiction to settle the disputes,â Jhunjhunwala added.