Tax demand on Vodafone, Cairn ‘can’t be disputed’

CBDT Chairman Atulesh Jindal said “as long as” the retrospective amendment of the IT Act passed by Parliament remains valid, the “demand (of tax against them) remains valid.”  Jindal, in an interview to PTI, said apart from UK’s Vodafone Group plc and Cairn Energy plc, there are about a dozen more such companies which are facing similar demands due to the retrospective amendment of the Income Tax Act. 

“They (companies) are basically challenging the retrospective amendment. Retrospective amendments have been passed by Parliament. They have not gone against passing of retrospective amendment before any court... so, as long as the retrospective amendment is valid, the demand (of the IT department) remains valid.

“Of course, it (demand) very much remains and this is a rightly generated demand,” he said. Finance Minister Arun Jaitley, in his Budget speech, announced a new dispute resolution mechanism for such companies who are in confrontation with the taxman’s action.  

“In order to give an opportunity to the past cases which are ongoing under the retrospective amendment, I propose a one-time scheme of Dispute Resolution for them,” Jaitley had said while presenting the Budget for 2016-17 in Parliament. The scheme entails paying up of the principal tax by the company that has been served with a tax notice and at the same time getting a waiver on interest and penalty. 

The CBDT boss said government has always made it clear that tax disputes “are not” covered under the Bilateral Investment Promotion and Protection Agreement (BIPA). “It is a different matter that they (companies) have gone under BIPA and our stand is that tax disputes are not covered under BIPA. That’s the situation. Hence, a sort of opportunity has been given to settle these disputes (in the Budget),” the Central Board of Direct Taxes (CBDT) Chairman said.