Once again legal battle is likely to be start between Vodafone and the govt. over the Supreme Court’s verdict in favour of Vodafone.
Two controversial facts came into existence that whether Supreme Court’s judgment would help the govt. to store its refund or it would exempt Vodafone from reverse tax amendment.
As the Union Budget 2012-13 presented in Parliament, proposing tax amendments, the Finance Minister Pranabh Mukherjee held a meeting on Sunday with the Minister of State, Mr Namo Narain Meena, at a post-Budget with industry associations.
During meeting, Mukherjee ruled out a reverse on the proposed tax change will directly affect Vodafone’s cross border deals via resuming the company’s $2.2 billion offshore transactions that were always “susceptible to tax”.
As per Supreme Court’s verdict in January, the India’s tax authorities was seeking to pay back deposited money of Vodafone as tax charged on the company’s 2007 acquisition of Indian mobile phone assets through an offshore deal.
But now this retrospective amendment to proposed tax change, that will be applicable on all deals since April 1, 1962 when the income-tax law came into force, will in favour of Indian government.
Now, Indian Tax authorities will claim that no refund is to be made to Vodafone due to the change in the law.
“Every finance minister will have to protect the interests of the government from a revenue point of view. He will have to protect the revenue which is otherwise liable to be returned,” Mukherjee said.
As per change in controversial taxation that would dampen business sentiments and lower the morale of foreign and domestic investors, according to tax experts, could acquire around Rs 35,000-40,000 crore revenues on indirect transfers.
Multi-national companies including Kraft Foods, SABMiller and AT&T Inc which also face potential tax demands in India over foreign company offshore transaction, however, will get benefited from this retrospective amendment to tax laws.
Despit it, the main question put in mind on the timing of the proposed changes because controversial tax issue has spanned four years, so why was it not done at the first available opportunity in 2008 through the Finance Bill?