Centre attempting to settle retrospective tax cases with 17 companies: Report

The Centre is reaching out to 17 companies in an attempt to withdraw cases related to retrospective tax, which was scrapped in the Monsoon Session of Parliament.

According to a report by Business Standard, the government has offered to settle the cases with the companies under conditions such as withdrawal of pending litigations and furnishing of an undertaking that they would file no claim for cost, damages or interest.

The 17 companies include Cairn Energy, Vodafone and WNS Capital.

The conditions are part of the Taxation Laws (Amendment) Bill, which was passed in Parliament.

Last week CBDT chairman J B Mohapatra wrote to jurisdictional officers to approach the cases which could benefit from the changes to retrospective taxation, the report said.

Explained | What is retrospective tax and why the Centre buried it

The CBDT chairman asked tax officers to identify the eligible cases under the new legislation. A template of the communication for these companies has also been shared with the respective officers, according to the report. The officers have also been asked to send details of the eligible cases and the related arbitration to the board.

“Instead of waiting for the other side to approach the government, the latter is approaching these companies to settle the cases. The government now wants their judicial closure. These cases are a big cost for the government, too,” a government official said.

“Besides the three companies — Cairn, Vodafone, and WNS Capital — there isn’t much to refund the other players. Therefore, it is on the companies to withdraw cases and do settlement with the government,” an official said.

Some of the cases related to retrospective tax include Earlyguard, a British subsidiary of Japanese conglomerate Mitsui & Co., which filed for arbitration under the India-UK bilateral investment treaty in May over a Rs 2,400 crore tax demand by the Indian government related to a transaction in 2007.

In another case, Brij Mohan Khaitan Group-controlled McLeod Russel, alleging that the retrospective tax amendments were unconstitutional and arbitrary, became the first Indian company to challenge the law, according to the report.

India is currently battling a $1.2 billion international arbitration by Cairn Energy and has asked a federal court in Washington to dismiss the suit.