New Delhi: Shell India on Tuesday described as “absurd” the demand for $1 billion in taxes on a $160 million equity infusion done by the Anglo-Dutch oil major four years ago, saying it tantamounted to tax on FDI.
Anglo-Dutch oil major Royal Dutch Shell Plc’s India unit head Yasmine Hilton said the company will challenge the notice that alleged tax evasion by under-pricing share transfer between member firms.
“We never comment in public about our tax affairs. The only reasons, and absolutely the only reasons, we commented on the issue was because it was reported that Shell was evading taxes. I cannot have our reputation tarnished that way. Shell does not evade taxes. At Shell, we have the highest business principles,” she said.
Hilton said the tax authorities have raised a tax demand of $1 billion (about Rs 5,400 crore) on an equity infusion of $160 million (about Rs 870 crore).
“To service the downstream business, which is not making money, we needed an equity injection in 2008 of $160 million. We have (now) received a tax request of $1 billion on this equity injection of $160 million. Somebody needs to explain (this) because I do not understand,” she said.
Income tax department has charged Shell India of under- pricing a share transfer within the group by Rs 15,220 crore, and consequently evading taxes.
The order relates to the issue of 8.7 crore shares by Shell India to an overseas company Shell Gas BV in March 2009. The shares were issued at Rs 10 a share, which the income-tax authorities contest and peg higher at Rs 183 a share instead.
She said in order to pay $ 1 billion in taxes, the company will need another equity infusion as the downstream fuel retailing business is loss making. And on that equity infusion, the company may get a $3 billion tax demand. “Just think about the absurdity about it”.