The government has extended an olive branch by waiving penalty and interest to multinationals like Vodafone and Cairn for one-time settlement of tax disputes arising out of retrospective law, but one isn't sure if the companies will accept it.
Revenue secretary Hasmukh Adhia's assertion that the government can't do away with the retrospective law, which was brought in by the United Progressive Alliance government, speaks of its political implications. Undoing the law, though legally permissible, would mean foregoing demands running into thousands of crores of rupees in tax component alone. It would be a political hot potato uniting the Opposition to sharpen knives against the ruling dispensation for what would be perhaps rightly seen as the government's willingness to be arm-twisted by the handful of powerful multinationals on the pretext of creating an environment for facilitating foreign investments. Also, what is equally intriguing is the absence of any legal challenge to the law by the firms. Vodafone has opted for international arbitration, whose jurisdiction in such matters is contested by tax authorities for valid reasons.
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Revenue secretary Hasmukh Adhia's assertion that the government can't do away with the retrospective law, which was brought in by the United Progressive Alliance government, speaks of its political implications. Undoing the law, though legally permissible, would mean foregoing demands running into thousands of crores of rupees in tax component alone. It would be a political hot potato uniting the Opposition to sharpen knives against the ruling dispensation for what would be perhaps rightly seen as the government's willingness to be arm-twisted by the handful of powerful multinationals on the pretext of creating an environment for facilitating foreign investments. Also, what is equally intriguing is the absence of any legal challenge to the law by the firms. Vodafone has opted for international arbitration, whose jurisdiction in such matters is contested by tax authorities for valid reasons.
S K Choudhury Bengaluru
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number